Recruiting and Retention in the Active Component Military: Are There Problems?

Congressional research reportFeb 25, 2002

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Recruiting and Retention in the Active Component

Military: Are There Problems?

February 25, 2002

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Analyst in National Defense

Foreign Affairs, Defense, and Trade

Congressional Research Service ˜ The Library of Congress

Recruiting and Retention in the Active Component

Military: Are There Problems?

Summary

This report provides information on recruiting and retention trends in the active

component of the armed forces since 1989, including recruiting and retention

shortfalls that occurred within the past few years; the congressional and executive

branch response to these shortfalls; and an assessment of the current situation.

Additionally, it contains an analysis of factors that may have an impact on recruiting

and retention in the future, and discusses policy options that could be considered to

minimize any negative effects that these factors might cause.

In recent years, the Military Services have experienced recruiting and retention

shortfalls for their active component forces. The Army, Navy, and Air Force had

trouble meeting their goals for new recruits (also known as “accessions”) in the late

1990s, and all of the Services experienced declines in the quality of their recruits from

the early 1990s to 2000. With respect to retention, the Army, Navy, and Air Force

had difficulty meeting their retention goals for enlisted personnel in the late 1990s,

and the Navy and Air Force are still having some problems today. Also, concerns

have been raised about low retention rates in certain critical specialties and a declining

retention rate among younger officers.

Cited causes of recruiting shortfalls in the late 1990s include the residual effects

of the post-Cold War drawdown, competition with a robust civilian economy,

competition with institutions of higher education, demographic and attitudinal changes

among younger Americans, and a need for more recruiting resources. Commonly

cited causes of retention shortfalls include competition with the civilian economy and

job dissatisfaction due to a variety of factors, including the nature and pace of current

military operations, a lack of critical supplies and equipment, “quality of life” issues,

and changes in the military culture. However, the data used to ascertain the causes

of these shortfalls have often been rather limited.

Congress and the executive branch have initiated or modified a number of

policies in response to these shortfalls. Most notably, Congress provided more money

for recruiters, advertising, enlistment bonuses and re-enlistment bonuses, as well as

increasing military pay and improving retirement benefits. The executive branch

refocused its advertising, provided its recruiters with more and better resources,

launched several programs designed to expand the pool of potential enlistees, and

began working on ways to better manage deployments. Additionally, other policy

changes have been made, most notably with respect to improving military housing

benefits and reimbursements for moves.

These policy changes and other factors appear to have had the desired effect, at

least in the short term. In fiscal years 2000 and 2001, all of the Services met their

quantity goals for new recruits. Recruit quality in fiscal year 2001 was slightly better

than it had been the previous year. With respect to retention, the data indicate

improvements in some areas. In spite of these positive signs, a number of longer term

factors – such as demographic, attitudinal, and lifestyle shifts – could have a negative

impact on recruiting and retention in the future.

Contents

Recruiting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Perceived Causes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Congressional Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

The Executive Branch Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Factors That May Cause Shortfalls in the Future . . . . . . . . . . . . . . . 17

Options for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Retention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Perceived Causes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

The Congressional Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

The Executive Branch Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Factors That Could Cause Shortfalls in the Future . . . . . . . . . . . . . . 40

Options for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

List of Tables

Table 1: Enlisted Accessions, Department of Defense . . . . . . . . . . . . . . . . . . . . 3

Table 2: Enlisted Accessions, Army . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Table 3: Enlisted Accessions, Navy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Table 4: Enlisted Accessions, Marine Corps . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Table 5: Enlisted Accessions, Air Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Table 6: Size of Youth Cohort Ages 18-24, 1980-2000 . . . . . . . . . . . . . . . . . . . 8

Table 7: Positive Propensity To Serve on Active Duty Among Those

16-21 Years Old . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Table 8: College Enrollment Rates of High School Graduates, 1989-1999 . . . . 13

Table 9: Active Enlisted Advertising Expenditure . . . . . . . . . . . . . . . . . . . . . . 14

Table 10: Active Enlisted Recruiters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table 11: Army Retention Rates For Enlisted Personnel, FY1989-2001 . . . . . 23

Table 12: Navy Retention Rates For Enlisted Personnel, FY1989-2000 . . . . . 25

Table 13: Navy Retention Rates For Enlisted Personnel, FY2001 . . . . . . . . . . 25

Table 14: Marine Corps Retention Rates For Enlisted Personnel,

FY1989-2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Table 15: Air Force Retention Rates For Enlisted Personnel, FY1989-2001 . . . 27

Table 16: Active Duty O3 Officer Continuation Rates by Service,

FY1989-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Table 17: Active Duty O4 Officer Continuation Rates by Service,

FY1989-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Recruiting and Retention in the Active

Component Military: Are There Problems?

This report provides information on recruiting and retention trends in the active

component of the armed forces since 1989, including recruiting and retention

shortfalls which occurred within the past few years; the congressional and executive

branch response to these shortfalls; and an assessment of the current situation.

Additionally, the report analyze factors that may have an impact on recruiting and

retention in the future and explores possible policy options that could address negative

effects that these factors might cause.

This report is broken down into two sections: the first section deals with the

issue of recruiting; the second with retention. Both of these sections are structured

in the following manner:

! Background information on recent shortfalls in recruiting or retention.

! A discussion of perceived causes of the shortfalls.

! A summary of the major congressional and executive branch response to those

shortfalls.

! An assessment of the impact of the congressional and executive responses.

! An analysis of factors that could have a negative impact on recruiting or

retention trends in the future.

! A discussion of policy options that Congress might consider.

Recruiting

Background. Recruiting has been called the life blood of the Military Services.

Without a robust ability to bring new members into the military, the Services would

lack sufficient manpower to carry out mission essential tasks in the near term and

would lack a sufficient pool of entry-level personnel to develop into the mid-level and

upper-level leaders of the future. To protect against this, the individual military

Services set goals for “accessions” or new recruits each year. There are both

“quantity” goals1 and “quality” goals. Officer and enlisted goals are set separately.

This quantity goal is based primarily on the difference between the congressionally authorized

end strength of the Service for a given fiscal year and the projected number of personnel the

Service will actually have at the end of the year. Officer and enlisted accession goals are set

separately. For example, if a Service has an authorized end strength of 200,000 enlisted

personnel in a given year, and it projects that it will retain 175,000 of its current enlisted

members through the year, it will set a goal 25,000 new enlisted recruits for that year. The

actual number of new enlisted recruits it needs, however, may fluctuate throughout the year

as new projections are made about the retention of currently serving enlisted personnel.

CRS-2

As the Services have generally achieved their goals for officer accessions in recent

years, this section will focus on enlisted accessions only.

In FY1998, the Army and the Navy failed to meet their quantity goals for

enlisted accessions, and in fiscal year 1999, the Army and the Air Force failed to meet

their quantity goals as well. This was perceived by some as a serious problem not

only because of its potential impact on the force structure, but also because none of

the military Services had failed to meet their enlisted accession quantity goal since

1979. See Tables 1 through 5 for a breakdown of actual enlisted accessions versus

goals for DOD and for each of the individual Services.

Although the quantity of enlisted recruits is an important measure of recruiting

success, so too is recruit quality. DOD measures enlisted recruit “quality” based on

two criteria: graduation from high school and score on the Armed Forces

Qualification Test (AFQT). Since fiscal year 1993, DOD’s benchmarks for recruit

quality stipulate that at least 90% of new recruits must be high school graduates and

at least 60% must score above average on the AFQT.2 Those recruits who are both

high school graduates and score above average on the AFQT are considered “high

quality recruits.”

Every Service has met or exceeded these recruit quality standards in every year

since they were established; indeed, every Service met or exceeded these standards

in each of the seven years preceding the establishment of the standard. However,

recruit quality peaked in fiscal year 1992 and generally declined up through fiscal year

2000. For example, between 1992 and 2000, the proportion of new recruits with a

high school diploma dropped from 99% to 91%, the proportion who scored above

average on the AFQT dropped from 74% to 66%, and the proportion of recruits who

were deemed “high quality” dropped from 74% to 57%. This trend is even more

pronounced with respect to the Army, which historically has always been the Service

with the greatest recruiting problems. This downward trend line of recruit quality

caused some concern in recent years, especially when coupled with the quantity

shortfalls of fiscal years 1998 and 1999.

These benchmarks were derived from a model called the Accession Quality Cost Performance

Trade-off Model (CPTM). The CPTM is an optimization model that solves for the “number

and quality mix of recruits predicted to generate a given level of performance and to fill

required positions over the first term of service at the lowest cost...The rationale underlying

the model is relatively straightforward. High-quality recruits – high school diploma graduates

scoring in the top half of the Armed Forces Qualification Test – are more capable in virtually

all military occupations. Their level of performance is higher, and they complete their

enlistment at higher rates than do other recruits. Hence, it takes fewer of them to generate a

given level of performance, and training costs are lower. However, the cost of each additional

high quality recruit increases at a greater rate than for other types of recruits...The CPTM

optimization model trades off the higher recruiting costs, higher expected performance, higher

retention, and lower training costs of the high-quality recruit with the lower recruiting cost,

lower expected performance, lower retention, and higher training costs of recruits from other

quality categories.” Office of the Assistant Secretary of Defense (Force Management Policy)

Report To Congress entitled Review of Minimum Active Enlisted Recruit Quality

Benchmarks: Do They Remain Valid?, March 2000, p. 5-6.

CRS-3

However, FY1992 was not a “normal” year: the resounding victory of the Gulf

War was fresh in people’s minds and the Services were taking in a comparatively low

number of new recruits, allowing them to be more selective. It is also important to

point out that no Service has fallen below DOD’s quality benchmarks. Thus, this

decline in recruit quality may simply be a return to “normalcy.” Additionally, the data

for fiscal year 2001 show slight improvements in the quality of Army, Marine Corps

and Air Force recruits. See Tables 1 through 5 for an overview of recruit quantity

and quality trends between 1989 and 2000. Additional data from 1975, 1980, and

1985 is included for historical perspective.

Table 1: Enlisted Accessions, Department of Defense

Recruit Quantity

Recruit Quality

1975

1980

1985

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Goal

456,600

388,785

316,449

292,021

229,172

206,573

200,168

206,290

184,020

174,806

185,646

196,957

192,309

195,092

202,017

Actual

457,547

389,861

316,676

293,896

232,315

206,617

202,752

206,927

184,096

175,783

185,987

197,081

186,132

187,180

202,917

Percent

100%

101%

100%

101%

100%

101%

100%

97%

96%

100%

HSDG

65%

66%

93%

92%

95%

97%

99%

95%

96%

94%

93%

91%

AFQT IIIIA

62%

38%

62%

64%

68%

75%

74%

71%

72%

71%

69%

68%

66%

“High

Quality”

45%

35%

56%

58%

64%

72%

74%

67%

68%

67%

65%

63%

59%

57%

2001

195,324

196,355

101%

93%

66%

61%

Source: Department of Defense, Directorate for Accessions Policy.

CRS-4

Table 2: Enlisted Accessions, Army

Recruit Quantity

Recruit Quality

1975

1980

1985

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Goal

209,100

172,800

125,300

119,875

87,000

78,241

75,000

76,900

68,000

62,929

73,400

82,000

72,550

74,500

80,000

Actual

208,915

173,228

125,443

120,535

89,620

78,241

77,583

77,563

68,039

62,929

73,418

82,088

71,733

68,209

80,113

Percent

100%

101%

103%

100%

103%

101%

100%

99%

92%

100%

HSDG

57%

52%

91%

90%

95%

98%

100%

95%

96%

95%

90%

AFQT I-IIIA

61%

22%

61%

62%

67%

80%

78%

70%

71%

69%

67%

68%

63%

65%

“High

Quality”

38%

21%

52%

55%

62%

78%

66%

65%

63%

58%

53%

52%

2001

75,800

75,855

100%

90%

63%

58%

Source: Department of Defense, Directorate for Accessions Policy.

Table 3: Enlisted Accessions, Navy

Recruit Quantity

Recruit Quality

1975

1980

1985

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Goal

110,000

97,627

87,592

94,286

72,402

68,311

58,208

63,073

53,964

48,637

48,206

50,135

55,321

52,524

55,000

Actual

110,030

97,678

87,592

95,186

72,846

68,311

58,208

63,073

53,982

48,637

48,206

50,135

48,429

52,595

55,147

Percent

100%

101%

100%

88%

100%

HSDG

74%

89%

90%

92%

96%

98%

94%

95%

90%

AFQT IIIIA

61%

51%

61%

57%

62%

66%

68%

70%

68%

66%

64%

65%

64%

“High

Quality”

49%

44%

51%

48%

55%

62%

66%

64%

63%

61%

60%

55%

54%

2001

53,520

53,690

100%

90%

63%

53%

Source: Department of Defense, Directorate for Accessions Policy.

CRS-5

Table 4: Enlisted Accessions, Marine Corps

Recruit Quantity

Recruit Quality

1975

1980

1985

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Goal

60,300

43,684

36,536

34,130

33,521

30,015

31,851

34,802

32,056

32,346

33,173

34,512

34,244

33,668

32,417

Actual

60,500

44,281

36,620

34,424

33,600

30,059

31,852

34,776

32,056

33,217

33,496

34,548

34,285

33,703

32,440

Percent

100%

101%

100%

101%

100%

103%

101%

100%

HSDG

47%

70%

97%

95%

98%

99%

97%

95%

96%

95%

AFQT IIIIA

55%

39%

55%

67%

66%

69%

71%

68%

71%

66%

65%

64%

“High

Quality”

32%

35%

53%

63%

62%

67%

70%

66%

68%

63%

62%

61%

60%

2001

31,404

31,429

100%

96%

64%

62%

Source: Department of Defense, Directorate for Accessions Policy.

Table 5: Enlisted Accessions, Air Force

Recruit Quantity

Recruit Quality

1975

1980

1985

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Goal

77,200

74,674

67,021

43,730

36,249

30,006

35,109

31,515

30,000

30,894

30,867

30,310

30,194

34,400

34,600

Actual

78,102

74,674

67,021

43,751

36,249

30,006

35,109

31,515

30,019

31,000

30,867

30,310

31,685

32,673

35,217

Percent

101%

100%

105%

95%

102%

HSDG

87%

84%

99%

AFQT IIIIA

69%

55%

69%

84%

85%

86%

80%

81%

84%

83%

79%

78%

76%

73%

“High

Quality”

63%

56%

69%

82%

85%

79%

80%

83%

82%

78%

77%

75%

72%

2001

34,600

35,381

102%

99%

75%

74%

Source: Department of Defense, Directorate for Accessions Policy.

CRS-6

Perceived Causes. A number of factors have been offered as the “cause”

of the quantity shortfalls in the late 1990s and the quality levels that, though still

above DOD’s benchmarks and quite high from a historical perspective, were declining

throughout most of the 1990s. Commonly cited causes include the residual effects

of the post-Cold War drawdown, competition with a robust civilian economy,

competition with institutions of higher education, demographic and attitudinal changes

among younger Americans, and insufficient recruiting resources. Such factors may

not be mutually exclusive and are not necessarily competing explanations. Rather,

they may each be seen as partial answers to the question “What caused these

recruiting trends?” Each is listed below and discussed in some detail; however, the

reader should be aware that they are not necessarily listed in order of actual

importance.

Perceived Cause #1: Residual Effects of the Post-Cold War

Drawdown. The end of the Cold War forced the United States to rethink the

security threats it faced and the type of military it needed to respond to those threats.

As a result of this re-evaluation, Congress substantially reduced the size of U.S.

military forces, primarily between fiscal years 1991 and 1996. This “drawdown” was

accomplished in part by offering military personnel early retirement and voluntary

separation bonuses, as well as by involuntarily separating a small number of those who

did not take advantage of these voluntary separation incentives. However, a key tool

in managing the drawdown was a large reduction in the number of new recruits

brought into the Services. As one report noted, “During the drawdown,

accessions...were deliberately cut below the level needed to sustain the force. This

avoided having to induce even more people to leave the military who otherwise might

want to stay.”3

Because accessions were cut below the level needed to sustain the force, a

substantial increase in the number of accessions was inevitable in subsequent years.

As Table 1 indicates, goals for accessions for all the Services dropped from 292,021

in FY1989, the last pre-drawdown year, to a low of 174,806 in FY1995. In FY1996

and subsequent years, the goals for accessions began increasing, to 202,017 in

FY2000. To put it another way, between FY1995 and FY2000, the Services’ demand

for new recruits increased by 16%. For the Army, the change was even more

pronounced: between FY1995 and FY2000, its need for new recruits grew by 27%.4

This increase might not have been a problem for the Services if it had not been

compounded by a variety of other factors that decreased the size of its primary

recruiting pool and inhibited recruiting effectiveness. These factors are discussed

below.

Military Recruiting Outlook: Recent Trends in Enlistment Propensity and Conversion of

Potential Enlisted Supply, 1996, RAND, p.1. Of all the services, the Air Force utilized this

strategy the most. See David Grissmer and Bernard D. Rostker, “Military Personnel in a

Changing World,” in 1991-1992 American Defense Annual, Lexington Books, 1992, 132135.

Note also that, during the drawdown, the Marine Corps’ was the Service whose strength was

decreased the least. As a result, it was able to maintain fairly constant accession levels

throughout the drawdown and subsequently. It is also the only Service that consistently met

its recruiting goals throughout the 1990s.

CRS-7

Perceived Cause #2: Demographic and Attitudinal Changes

Among Young Americans. The vast majority of new recruits are young men,

usually those who have just graduated from high school and those who have spent a

few years in a civilian job or in college. Thus, the primary demographic group

targeted by recruiters is 18-24 year old males. Since 1981, the size of this age cohort

has been decreasing, the product of declining fertility rates in the 1960s and 1970s

(the “baby bust”). In the late 1990s, there were roughly 1 million fewer 18-24 year

old men than there were in 1989. The size of the 18-24 year old male cohort reached

its lowest point in 1996, and has been gradually increasing since then (See Table 6).

Population projections indicate that this cohort will continue to increase in size until

2013, at that point it will begin to decline again.5

Women make up a small but significant proportion of new recruits. In 1999,

they made up 18% of enlisted accessions. The female 18-24 year old cohort declined

from 1981 to 1996 and has been gradually increasing since then. It, too, is expected

to increase in size until 2013, at that point it will begin to decline again.

In addition to the smaller size of the 18-24 year old cohort during the 1990s,

attitudinal changes among younger Americans also made it more difficult for the

Services to recruit during that time-frame. Until 1999, the Department of Defense

conducted an annual survey known as the Youth Attitude Tracking Study (YATS),

which measured the attitudes of youth between the ages of 16 and 24.6 One of the

key types of questions asked in that survey concerned the individual’s “propensity to

serve” or willingness to consider joining the military. The correlation between

propensity to serve and the likelihood of eventually joining the military is quite strong.

One study compared the propensity to serve of high-quality youth with actual

enlistment rates and found that among those with a highly positive propensity to

serve, 34.4% actually enlisted; among those with a lower, but still positive, propensity

to serve, 19% actually enlisted; and among those with a negative propensity to serve,

only 5.1% actually enlisted.7 Thus, changes in a cohort’s propensity to serve can

make it easier or harder for the Services to recruit.

Positive propensity to serve among 16-21 year old males dropped significantly

between 1989 and 1999. In 1989, the last pre-drawdown year, 33.7% of young men

(16-21 years old) indicated a positive propensity to serve. That number generally

declined in subsequent years, although it jumped up in 1991, in the aftermath of the

Gulf War victory, and showed a small increase in 1995. Positive propensity to serve

also showed an increase in 1999, with 28.6% of young men indicating a positive

U.S. Census Bureau, Population Division, Population Estimates Program, for years 19802000. U.S. Census Bureau, Population Division, Population Projections Program for years

2001 and later.

In 1999, YATS was replaced by a trimester quick-turn polling process.

Military Recruiting Outlook, Recent Trends in Enlisted Propensity and Conversion of

Potential Enlisted Supply, RAND Corporation, 1996, 10-11. Note, however, that even

though those with a negative propensity to serve have a very low likelihood of joining the

military, they make up about half of each year’s accessions. This is due to the very large size

of the “negative propensity” group, which constitutes the great majority of the target

population.

CRS-8

propensity to serve. A similar but less pronounced trend in positive propensity to

serve occurred among young women, although their level of positive propensity to

serve has historically been much lower than that of young men. Additionally, in

recent years their level of positive propensity to serve has returned to its predrawdown level. The trend in positive propensity to serve for 22-24 year old males

and females has generally tracked that of their younger peers, but at a lower level.

Table 6: Size of Youth Cohort Ages 18-24, 1980-2000

(In Thousands)

Year

Males

18-24

Females

18-24

Total

18-24

1980

15,101

15,002

30,103

1981

15,192

15,053

30,245

1982

15,165

14,994

30,159

1983

15,070

14,854

29,924

1984

14,860

14,601

29,461

1985

14,596

14,306

28,902

1986

14,283

13,944

28,227

1987

14,032

13,660

27,692

1988

13,888

13,467

27,355

1989

13,817

13,338

27,155

1990

13,679

13,155

26,834

1991

13,418

12,935

26,353

1992

13,240

12,736

25,976

1993

13,111

12,629

25,740

1994

12,931

12,466

25,397

1995

12,793

12,320

25,113

1996

12,662

12,180

24,842

1997

12,737

12,243

24,980

1998

12,995

12,482

25,477

1999

13,276

12,736

26,012

2000

13,658

13,090

26,748

Source: U.S. Census Bureau, Population Division.

CRS-9

Table 7: Positive Propensity To Serve on Active Duty Among

Those 16-21 Years Old

Year

White

Males

African

American

Males

Hispanic

Males

Total

Males

White

Females

African

American

Females

Hispanic

Females

Total

Females

1989

28.6

54.2

46.1

33.7

8.9

32.2

24.6

14.2

1990

27.2

41.9

47.0

32.3

8.6

23.9

20.9

13.2

1991

28.5

49.2

45.9

34.3

9.3

28.2

28.4

15.2

1992

24.7

35.6

45.3

29.4

8.6

16.2

22.2

12.0

1993

24.7

36.8

42.1

29.4

7.5

23.4

20.7

12.0

1994

22.2

31.6

39.4

26.3

8.8

20.1

24.9

13.4

1995

22.5

32.4

43.6

27.5

7.4

24.3

25.1

13.5

1996

20.4

33.6

42.7

26.5

9.2

23.4

25.0

14.4

1997

21.2

34.2

36.8

26.2

7.0

19.0

20.5

11.6

1998

20.2

29.6

43.7

26.2

7.2

23.0

25.9

13.4

1999

22.0

35.7

46.1

28.6

9.1

28.9

22.4

15.0

Source: Department of Defense, Youth Attitude Tracking Study.

The reasons for the decline in propensity to serve during the 1990s are not

entirely clear. Some have attributed it to the low advertising budgets of the military

during the drawdown years; others have attributed it to the declining number of

veterans among youth “influencers” such as parents, teachers, and guidance

counselors. While plausible, these accounts do not adequately explain why the decline

has been heavily concentrated among one specific group: African American males.

African Americans have long had a higher propensity to serve in the military than

whites or Hispanics, so this trend may simply be a normalization of African American

attitudes towards the military. Nonetheless, if such a decline were to persist, it would

have troubling ramifications for the military’s ability to recruit, as it has long

benefitted from the relatively high propensity to serve of African American men to fill

its ranks. The propensity of this group to serve did rebound in 1999.

Perceived Cause #3: A Robust Civilian Economy. Traditionally, the

primary recruiting pool for enlisted personnel has been young men8 who have

graduated from high school within the past few years. Essentially, these people have

three options available to them: enlist in the military, work in a civilian job, or attend

About 80% of recruits are male. The age breakdown of new recruits for the military in

FY1999 was as follows: age 17 (6.1%), age 18 (34.3%), age 19 (22.2%), age 20 (11.6%), age

21 (7.4%), age 22 (5.1%), age 23 (3.5%), age 24 (2.6%), older than 24 (7.2%). Source:

Office of the Assistant Secretary of Defense (Force Management Policy), Population

Representation in the Military Services, November, 2000, p. 2-10.

CRS-10

college.9 The decision among these options is based on a number of factors, one of

which is a rough comparison of the costs and benefits that could be derived from each

choice. When the civilian economy is “booming,” the anticipated costs of pursuing

a civilian job decrease while the anticipated benefits increase. One measure of the

relative attractiveness of civilian employment versus military employment is the

unemployment rates. The higher the unemployment rate, the lower the chance an

individual has of securing and keeping a civilian job, and this in turn makes military

employment more attractive. Historical data indicates that the unemployment rate in

the United States was generally falling from 1992 to 2000.10

Another measure of the attractiveness of civilian employment versus military

employment is relative levels of compensation. If military compensation is lower than

civilian compensation, military service becomes a less attractive option, and vice

versa. However, compensation levels can be difficult to quantify accurately. For

example, the valuation of employer provided benefits can differ markedly depending

on the methodology used. Even seemingly simple comparisons, like pay rates, can be

complicated due to the differing structure of military and civilian pay. For example,

military pay includes not only basic pay, but allowances for housing and subsistence,

and tax advantages as well. Some members of the military receive bonuses and

special pays too. As a result, estimations of average military pay levels can vary

substantially depending on how these different elements are accounted for.

An alternative to comparing average military and civilian pay is to compare rates

of pay growth over time. Typically, military basic pay is the variable used to calculate

changes in military pay levels and the Employment Cost Index (ECI)11 is the variable

used to calculate changes in civilian pay levels. Using this methodology, if civilian

pay grew by 25% over a given time period and military pay grew by 15% over the

same time-frame, one might conclude that military pay was becoming less competitive

relative to civilian pay during that period. This methodology has been widely used

to create a measure of pay competitiveness during the past two decades and, during

the 1990s, it indicated a “pay gap” of about eleven to 13% in favor of civilian

employment.12 It also indicated that the gap grew as the decade progressed.13

Kilburn, Rebecca and Jacob Alex Klerman, Enlistment Decisions in the 1990s: Evidence

from Individual Level Data, RAND Corporation, 1999.

The unemployment rate in 1992 was 7.5%; from there it dropped steadily to 4.0% by 2000.

The Employment Cost Index used measures changes in private sector wages and salaries

Congressional Budget Office report entitled What Does The Military “Pay Gap” Mean,

June 1999, by Richard L. Fernandez, figure 2.

A likely reason for this increase in the “pay gap” in the 1990s was the way in that military

pay raises were calculated for much of that decade. Since 1967, federal law has provided that

military pay be adjusted upward, at the same time and by the same percentage, as the average

increase in the pay rates for federal General Schedule (GS) employees. In 1990, Congress

enacted a statutory formula for federal civilian pay raises that provided for an annual increase,

beginning in fiscal year 1992, of 0.5% less than the annual increase in the employment

compensation index (ECI). Thus, by statute, military pay raises were supposed to be

determined by the an “ECI minus 0.5%” formula. As the “pay gap” formula is based on a

(continued...)

CRS-11

However, the methodology used to create this measure has serious shortfalls as well,14

including the previously mentioned problem of which elements of military pay to

count as “pay.” Indeed, some studies have disputed the existence of a “pay gap,” or

have found no link between the pay gap as it is usually measured and recruiting or

retention.15 However, whether this “pay gap” actually existed, or was as large as

claimed, was to a certain extent overshadowed by the wide media coverage of the

issue, which often reported the existence of a “pay gap” as though it were an

established fact.

Thus, although the data on relative pay levels is ambiguous, it seems fair to say

that military pay was widely perceived as being lower than civilian pay during the

1990s. Coupled with the previously mentioned data on unemployment rates, this

lends some support to the argument that civilian jobs became an increasingly

attractive option to recent high school graduates during the 1990s, thus increasing

competition for the pool of potential enlistees.

Perceived Cause #4: Increase in College Bound Youth. As

mentioned above, the military’s primary recruiting pool for enlisted personnel has

traditionally been young men who have graduated from high school within the past

few years. These individuals either enlist in the military, work in a civilian job, or

attend college. The latter choice has become increasingly popular in recent years. In

1980, just under half (46.7%) of male high school graduates went straight on to

college. That proportion rose to 57.6% in 1989 and peaked at 63.5% in 1997. Since

then, the proportion has tapered off slightly to 61.4% in 1999.16 Among women, a

similar trend is evident, although women have gone straight from high school to

college at a consistently higher rate than men in every year but one since 1988.

In part, this trend is due to the perceived benefits of a college education: better

employment prospects, higher wages, and higher social status. Nor is this perception

misguided. One study showed that, in 1998, the earnings of those who had completed

at least a bachelor’s degree were dramatically higher than those who had only a high

school education. For men, the “college premium” was 56% – that is, men with at

least a bachelor’s degree earned 56% more than those with just a high school diploma

– while for women, it was 100%. Additionally, this college premium has increased

(...continued)

comparison of the ECI and military basic pay, it is not surprising that the “pay gap” grew.

For a more extensive discussion on the difficulty of comparing military and civilian

compensation generally, and pay specifically, see CRS Issue Brief IB10089, Military Pay and

Benefits: Key Questions and Answers, by Robert Goldich, p. 8-10. See also the CBO report

entitled What Does The Military “Pay Gap” Mean?, by Richard L. Fernandez.

See Eugene J. Devine, The Myth Of The Military Pay Gap: Comparison of Military and

Civilian Earnings Levels, paper presented at the Conference of the Western Economic

Association International, July 1, 1996; and the CBO report entitled What Does The Military

“Pay Gap” Mean?, by Richard L. Fernandez. See also Andrew Compart, “Study Casts

Doubt On Military pay Gap,” Navy Times, October 6, 1997, 8.

U.S. Department of Commerce, Bureau of the Census, Current Population Reports, Series

P-20.

CRS-12

fairly steadily over the past two decades. In 1980, for example, the college premium

for men was only 19%, while it was 52% for women.17

An additional reason for the increasing rates of college attendance may be found

in the decreasing financial barriers to attending college. Although it is true that the

costs of attending college have grown significantly in recent years, this has been

accompanied by an increasing number of ways to finance the costs. Students now

have access not only to scholarships, grants, and student loans, but are increasingly

able to get tuition reimbursement from their employers or to receive financial

assistance in exchange for some type of public service other than active military

service. Since World War II, the premier educational assistance package for public

service has been the GI Bill,18 but the GI Bill now has competition from other sources.

As military sociologist Charles Moskos points out:

“...we now spend over $15 billion a year on Federal grants and loan subsidies to

college students. In other words, we’re paying people not to serve their country.

We have created...a GI Bill without the GI. In fact, if you have a GI Bill, if you

get the Montgomery GI Bill, colleges will deduct other student aid. They’ll count

the GI Bill as part of their income and therefore reduce student aid you might

otherwise get.”19

In addition to federal educational grants, the GI Bill also faces competition from

federal programs like AmeriCorps, which provides participants with educational

grants of up to $9,450 upon completion of service, and from various state National

Guards, which often offer free tuition at state schools as a benefit of membership in

addition to the scaled down version of the GI Bill available to all reservists.

Additionally, it is not uncommon today for private businesses to provide educational

benefits to their employees.

U.S. Department of Education, National Center for Education Statistics, The Condition of

Education 2000, NCES 2000-062 (Washington, D.C.: U.S. Government Printing Office)

June, 2000, 34.

“GI Bill” is a generic term used to describe the veteran’s educational benefits authorized by

various acts of Congress since 1944. The current GI Bill is formally known as the

Montgomery GI Bill and it provides up to 36 months of educational benefits to eligible

veterans for college or certain other educational programs. The monthly benefit for an

individual varies depending on a variety of factors, but the basic benefit for full time students

at eligible educational institutions was $672 per month in 2000. As a result of provisions in

the Veterans Education and Benefits Expansion Act of 2001 (P.L. 107-103, section 101), the

benefit was increased to $800 per month on January 1, 2002, and will increase to $900 per

month on October 1, 2002 and to $985 per month on October 1, 2003.

Speech by Dr. Charles Moskos, Professor of Sociology at Northwestern University,

delivered to the 121st National Guard Association of the United States General Conference,

Sept. 5, 1999.

CRS-13

Table 8: College Enrollment Rates of High School Graduates,

1989-1999

(Percent of Total)

Year

Total

Male

Female

1989

59.6%

57.6%

61.6%

1990

59.9%

57.8%

62.0%

1991

62.4%

57.6%

67.1%

1992

61.7%

59.6%

63.8%

1993

62.6%

59.7%

65.4%

1994

61.9%

60.6%

63.2%

1995

61.9%

62.6%

61.4%

1996

65.0%

60.1%

69.7%

1997

67.0%

63.5%

70.3%

1998

65.6%

62.4%

69.1%

1999

62.9%

61.4%

64.4%

Source: Department of Education, Digest of Educations Statistics: 2000

The data on college attendance certainly supports the argument that competition

from higher education decreased the supply of potential recruits in the 1990s. The

historically high proportion of people enrolling in college immediately after high

school posed a direct challenge to the military’s enlisted recruiting efforts, which has

traditionally focused on recruiting recent high school graduates. Put simply, with

more high school graduates choosing to go straight to college, fewer potential recruits

were in the military’s primary recruiting pool.

Perceived Cause #5: Insufficient Recruiting Resources. The

preceding paragraphs point to both an increase in the military’s demand for recruits

and a decrease in the available supply of potential enlistees as the fundamental causes

of the military’s recruiting shortfalls in the mid to late 1990s. However, another

factor certainly bears examination: the resources available to the Services to achieve

their recruiting goals. Most agree that these resources – such as advertising,

recruiters, enlistment bonuses, and educational benefits – have historically been

valuable tools for convincing potential recruits to sign an enlistment contract. While

it would be impossible to specify the “correct” level of these resources, it appears that

the levels were not adequate for the challenging recruiting environment that emerged

as the 1990s progressed.

As mentioned previously, a key tool the military used in managing the drawdown

was a large reduction in the number of new recruits brought into the Services. Based

on this policy of reduced accessions, the military spent less on recruiting related

expenditures during the drawdown period. For example, as Table 9 indicates, the

total advertising expenditures for all the Services fell by over 50% between 1989 and

CRS-14

1993. The number of recruiters employed by the Services also dropped between 1990

and 1994 by about 10%, as indicated in Table 10. This aggregate figure, however,

masks the fact that the Army reduced the number of recruiters it employed by 15%,

while the Navy cut its recruiting force by 25%. The Marine Corps, it should be

pointed out, actually increased the number of recruiters it employed between 1990

and 1994 by nearly 20%.

Table 9: Active Enlisted Advertising Expenditure

(Constant FY2001 Dollars, in Millions)

Fiscal

Year

Army

Navy

Air

Force

Marine

Corps

TOTAL

1989

76.5

20.1

11.3

18.0

125.9

1990

73.0

26.0

7.6

17.2

123.9

1991

49.4

15.2

3.7

10.8

79.1

1992

41.8

11.6

4.6

11.4

69.4

1993

34.3

13.9

5.2

11.5

64.9

1994

45.2

33.6

6.3

11.3

96.4

1995

57.9

39.8

11.5

10.7

120.0

1996

72.8

42.7

10.5

15.2

141.2

1997

98.0

38.2

12.0

21.3

169.5

1998

97.8

63.8

12.3

27.2

201.1

1999

102.7

67.3

60.5

32.1

262.6

2000

106.3

64.7

49.7

33.0

253.7

CRS-15

Table 10: Active Enlisted Recruiters

Fiscal

Year

Army

Navy

Air

Force

Marine

Corps

TOTAL

1989

N.A.

1990

6,228

4,184

1,175

2,136

13,723

1991

5,860

4,337

1,132

2,388

13,717

1992

5,938

3,842

1,178

2,325

13,283

1993

5,577

3,702

1,151

2,325

12,755

1994

5,307

3,132

1,153

2,550

12,142

1995

5,771

3,408

1,010

2,550

12,739

1996

5,774

3,450

1,010

2,550

12,784

1997

5,772

3,492

1,017

2,550

12,831

1998

5,691

3,561

1,068

2,650

12,897

1999

5,961

5,074

1,364

2,650

14,753

2000

6,257

4,931

1,426

2,650

15,202

Recruiting resources increased steadily between 1994 and 1998, and rose

dramatically after 1998, but some believe that the decline in recruiting resources in the

early part of the decade had a negative long term affect on recruiting. According to

the Department of Defense, “With the military drawdown, we cut advertising

budgets... and reduced the number of people that we enlisted.... We believe that this

created a perception that the military was no longer hiring. We also believe that by

not advertising during the middle of the 1990s we missed the opportunity to

communicate with people who are now enlistment age.”20

The Congressional Response. Congress has expressed concern about

recruiting trends since at least 1994. The committee report that accompanied H.R.

4301, the National Defense Authorization Act for Fiscal Year 1995, stated:

The committee has heard compelling testimony from [the] Department of Defense

and Service witnesses that the armed forces are experiencing difficulty in meeting

recruiting objectives. If left unchecked, these trends will ultimately require the

Services to access lower quality recruits than those that fueled the resurgence of

the armed forces in the 1980s.21

Response provided by the Directorate for Accessions Policy, Office of the Assistant

Secretary of Defense (Force Management Policy), in response to questions asked by the

author of this report.

H.Rept. 103-499, Report of the Committee on Armed Services on H.R. 4301, the National

Defense Authorization Act for Fiscal Year 1995, May 10, 1994, 184.

CRS-16

Similar concerns are found in the committee reports accompanying many subsequent

Defense Authorization bills through FY2001. The level of concern evidenced in these

reports increased substantially in FY1998 and FY1999, when several of the Services

failed to meet their accessions quantity goals.

Congress has responded to the military’s recruiting challenges in a number of

ways. The most direct way has been to increase the amount of money available for

activities related to recruiting, such as advertising (see Table 9), enlistment bonuses,

and educational benefits. It has also authorized substantial pay increases for the

military.22 Additionally, Congress has taken action to preserve recruiters’ access to

students in the following ways: by prohibiting almost all colleges that accept federal

funds (except student aid) from discriminating against recruiters on campus; by

prohibiting secondary schools that receive certain types of federal assistance from

discriminating against recruiters on campus; and by requiring those secondary schools

to provide military recruiters with access to the names, addresses and phone numbers

of their students, unless the student or parent of the student objects.

Less directly, Congress has also funded an increasing number of Junior Reserve

Officer Training Corps (JROTC) programs, which are located at high schools.

Although recruiting is not the purpose of JROTC, and its members are in no way

legally affiliated with the armed forces, it may instill participants with a positive

attitude towards the military. The Army Times, for example, reported that “more

than half of the students who participated [in JROTC] become affiliated with the

military in some fashion.”23 Nonetheless, the extent to which JROTC instills positive

attitudes towards the military, as opposed to simply attracting people who already

view military service positively, is unclear.

The Executive Branch Response. The executive branch has taken a

number of actions designed to mitigate its recruiting shortfalls. The Department of

Defense has conducted more market research on both potential enlistees and their

“influencers” (e.g. parents, teachers, and guidance counselors), and has used this

information to refocus its advertising campaigns. Thus, most of the Services have

recently devised new advertising “messages” to appeal to the attitudes of young

Americans and have developed a stronger presence on the Internet, a popular medium

of communication for these potential recruits.

Significantly, the military has also begun to rethink its strategy of recruiting

enlistees primarily from the ranks of recent high school graduates. Increasingly, the

Services are implementing programs that are designed to appeal to college minded

students. For example, the Army’s “College First” program pays a stipend to people

while they are in college in exchange for enlisted service after graduation. Recruiters

are also working with colleges and universities to contact those students who “drop

out” (leave college with no intention of returning) or “stop out” (leave college with

the intention of coming back in the future). The Army has also launched a pilot

program known as “GED Plus,” which helps high school drop-outs with exceptionally

For more information on military pay raises, see CRS Issue Brief IB10089, Military Pay

and Benefits: Key Questions and Answers, by (name redacted).

Army Times, “Congress Sets Own Goals For Recruiting,” June 7, 1999, p. 16.

CRS-17

high scores on the AFQT to complete their General Educational Development (GED)

credential and then enlist in the Army.24

Results. The response of Congress and the executive branch over the past few

years, together with other factors such as a slackening economy, has yielded some

success. In FY2000, for the first time in three years, all Services met their recruiting

goals for both quantity and quality, and this success was repeated in FY2001.

Additionally, recruit quality improved slightly for most of the Services in FY2001.

It seems fair to conclude that the increased recruiting budgets, improved pay and

benefits, and modified recruiting strategies have had a positive effect on recruiting.

Some of this improvement can also be attributed to factors largely unrelated to new

recruiting initiatives: for example, the growing youth cohort, an economic slowdown,

a slight drop off in college enrollment rates, and the hard work of individual military

recruiters.

Factors That May Cause Shortfalls in the Future. Despite the recent

improvements in meeting recruiting goals, a number of factors have the potential to

cause recruiting shortfalls in the future. These factors – changes in the military’s

recruit quality needs, demographic changes, and continuing competition with

institutions of higher education – have the potential to significantly reshape the

recruiting environment. Additionally, a resurgent economy and further declines in

“propensity to serve” could cause recruiting shortfalls as well.

Factor #1: Changing Recruit Quality Needs. Assuming that military

personnel requirements (i.e. end strengths) are not significantly increased in future

years, and assuming stable retention, the military’s demand for new recruits will not

increase significantly over the number of accessions required in FY2001. However,

the type of recruit needed may change dramatically over the next twenty years. Much

attention has been paid to the “revolution in military affairs” (RMA), a military

concept based on the premise that the integration of sophisticated information

technologies into military operations will transform the way in which the United

States fights its wars. Typically, discussions of RMA center on new types of

“networked” combat systems or on new tactics that can be employed while utilizing

these systems. Less frequently mentioned is the type of people who will be required

to man these systems and implement the tactics. They may need to have higher

cognitive ability than is presently required, and this could reduce the pool of people

qualified to enlist.25 Additionally, as these “high cognitive ability individuals” are

highly prized by corporations and institutions of higher education, competition for

them will be fierce.

Allowing more recruits with GEDs into the Services is a controversial issue. See the section

entitled “Revised Recruit Criteria” later in this report.

On the other hand, technology may simplify certain military tasks in such a way as to reduce

the need for high cognitive ability. For example, a test conducted in 1984 showed that the

performance differential between upper AFQT tank gunners and lower AQFT tank gunners

was lower on the new, more technologically sophisticated M-1 tank than on the older M-60

tank. Barry L. Scribner, D. Alton Smith, Robert H. Baldwin, and Robert W. Phillips, Are

Smart Tankers Better Tankers: AFQT and Military Productivity, Office of Economic and

Manpower Analysis, United States Military Academy.

CRS-18

Factor #2: Changing Demographics. Another important factor is the

changing demographics of the youth cohort. As indicated previously, the size of the

18-24 year old cohort is expected to expand in size through the year 2013. This is

good news for recruiters, as it means there is a larger pool of potential enlistees from

which to recruit. Additionally, as this cohort grows in size, it is also expected to have

an increasing proportion of Hispanics, who currently have the highest “propensity to

serve” of any major ethnic or racial group. This too could be good news for

recruiters, if it creates a primary recruiting pool with an increasingly positive attitude

towards military service. However, the increasing representation of Hispanics in the

youth cohort also has a drawback: one of DOD’s key measures of recruit quality is

possession of a high school diploma and Hispanics currently have a much higher high

school drop-out rate than other major groups. In 1999, for example, the drop-out

rate among Hispanics was 29%, compared to 7% for whites, and 13% for African

Americans.26 Thus, unless the high school graduation rate increases for Hispanics or

DOD changes its definition of recruit “quality,” the benefit from the increase in cohort

size may be less than proportional.

Factor #3: Competition With Institutions of Higher Education.

Competition with colleges appears to be one of the key recruiting challenges of the

future. As mentioned previously, the “wage premium” awarded to college graduates

is large and growing. Today, nearly two of every three high school students go

straight on to college after graduating from high school27 and that proportion may

increase in the future. This changing educational pattern will almost certainly require

DOD to shift its primary recruiting pool from recent high school graduates to those

with at least some college.28 Such a shift would pose significant challenges.

Recruiting incentives, for example, would need to be adapted from targeting those

with future plans for college toward targeting those with immediate plans for college,

those who are already in college, and those who have recently left college. Recruiters

would also need to be retrained to market the benefits of military service to people

whose career plans are substantially different than the typical high school graduate.

Additionally, colleges might be more reluctant to cooperate with recruiters than high

schools have been, as colleges might perceive recruiting efforts as attempts to “steal”

their undergraduates.

Factor #4: Competition with civilian employers. The United States is

currently in the midst of an economic slowdown, which started in early 2001. This

actually benefits military recruiting, as it reduces the competition it faces from civilian

employment opportunities. However, the economy tends to follow a cyclical trend,

so it is likely that the currently sluggish economic conditions will be replaced in the

U.S. Department of Education, The Digest of Education Statistics 2000 (Washington, D.C.:

National Center For Education Statistics, 2001), Table 106.

U.S. Department of Education, The Digest of Education Statistics 2000 (Washington, D.C.:

National Center For Education Statistics, 2001), Table 185. See Table 8 for historical data

on college enrollment rates of high school graduates.

In FY1999, the percentage of new recruits with college experience was 6.6%. Office of the

Assistant Secretary of Defense (Force Management Policy), Population Representation in

the Military Services, Fiscal Year 1999, table 2.7.

CRS-19

not too distant future by a more robust economy. Such a revival could create

challenges for military recruiting like the economic boom of the 1990s did.

Factor #5: Changing Attitudes Towards Military Service. It appears

that the decline in “propensity to serve” that began in 1992 reached its low point in

1997 and 1998 (See Table 7). The data from 1999 show an increase in this key

predicator of willingness to serve in the military, and this upward trend may continue

in light of the growing proportion of Hispanics in the youth population. Such a trend

would be good news for the military Services. However, if a downward trend recurs

in future years, it would have a negative effect on recruiting.

Options for Congress. Should any of these factors manifest themselves in

the future, Congress may consider legislative remedies. Below is a list of policy

options that could address one or more of the factors mentioned above.

Increase Recruiting Resources. Historically, the first response to a

difficult recruiting environment has been to increase the amount of funds available for

recruiting operations; specifically, funds for advertising, enlistment bonuses, and

increasing the number of recruiters on duty. Experience has shown that this response

is usually an effective way of improving recruiting within a relatively short time

frame,29 and the amount of funding committed can be scaled to match the scope of the

recruiting shortfall. This approach likely would be effective if it appeared that

recruiting shortfalls were principally caused by increased recruit quality demands,

competition with higher education, or competition with civilian employers (factors

1, 3, and 4 above).

Revised Recruit Quality Criteria. This response might be considered if it

appeared that recruiting shortfalls were caused by changing demographics, specifically

the increased representation of a group that has a relatively low rate of high school

completion (factor 2 above). As mentioned earlier, completion of high school is one

of the two key indicators that DOD uses to assess recruit “quality.” It is important

to point out, however, that the primary reason that DOD uses graduation from high

school as an indicator of recruit quality – rather than a GED – rests on the strong

statistical link between completion of high school and completion of one’s enlistment

contract. In other words, those who graduate from high school are substantially more

likely to complete their enlistment than those who did not complete high school but

who have a GED.30 As a measure of quality then, high school graduation is less one

of intelligence or knowledge and more one of perseverance. Admittedly,

perseverance is a critical factor in recruit quality, for failure to complete an enlistment

Author’s conversation with Bernard Rostker, former Under Secretary of Defense for

Personnel and Readiness.

According to the Department of Defense, “About 80% of recruits with a high school diploma

will complete their first three years, whereas only about half of those who failed to complete

high school will make it. Those holding an alternative credential (e.g. General Educational

Development [GED] high school equivalency certificate) fall between those extremes.” Office

of the Assistant Secretary of Defense (Force Management Policy), Report to Congress,

Review of Minimum Active Enlisted Recruit Quality Benchmarks: Do They Remain Valid?,

March, 2000, p. 1

CRS-20

contract results in higher training costs for the military, undermanned units, and

personnel turbulence. However, there may be alternative ways by which an

individual’s “perseverance” could be measured. Currently, DOD is testing just such

an alternative measure in the form of a questionnaire known as the “Assessment of

Individual Motivation.” If it proves to be an accurate gauge of an individual’s

motivation, it could be coupled with a GED as a substitute for the high school

graduation requirement without lowering recruit quality. Congress, which has

generally been skeptical about suggestions to alter recruit quality standards, may

decide to closely review any such changes.

Expanding and Restructuring Military Educational Programs. This

response could be explored if it appeared that recruiting shortfalls were caused by

increased recruit quality demands or by increased competition with institutions of

higher education (factors 1 and 3 above). The military’s extensive educational

benefit programs are primarily structured to attract those who want to go to college

eventually, but not to attract those who want to go to college immediately after high

school, those who are already in college, or those who have completed at least some

college.

For example, the principal educational benefit offered to enlistees is the

Montgomery GI Bill. The Montgomery GI Bill provides a substantial educational

benefit to enlistees in return for their service, but until recently they could only use it

after they fulfilled their enlistment contract. (Even so, most service members do not

use their benefits until after they leave the military). The military also has an extensive

network of colleges that service members can attend while on active duty. The cost

of the courses is largely or entirely paid for by the military. Although it is possible to

complete an associate’s, bachelor’s, or even a graduate degree through these

“concurrent education” programs, it can be difficult for service members to take full

advantage of them because military duties can easily conflict with academic pursuits.

Recently, some of the Services have implemented student loan repayment programs

for those who have already attended college and are willing to enlist. There has also

been some experimentation with “college first” type programs, where the military

provides a stipend to individuals while they attend college in exchange for military

service after completion of college. At present, however, these programs are

relatively small in size and not offered by all Services.

If the Services want to expand their pool of recruits – to include those who are

motivated to go to college immediately after high school, those already in college, and

those who have some college education already – they could request Congress to

consider a restructured educational benefits program. Expansion of the student loan

repayment program and “college first” type programs would be options for doing this.

Another option might be to integrate the military’s “concurrent education” programs

more closely into an individual’s enlistment contract. For example, the Services might

guarantee an enlistee that in exchange for a 6-year enlistment, he or she would be

given enough “educational leave” during the course of the enlistment to complete an

associate’s degree. Incentives such as full military pay and benefits while attending

a college that accepted military training as partial credit towards an associate’s degree

could be considered. Tuition and fees might either be paid for out of the individual’s

Montgomery GI Bill benefit, or directly by the military.

CRS-21

More Generous Pay and Benefits. This approach could be effective if it

appeared that recruiting shortfalls were principally caused by increased recruit quality

demands, competition with higher education, or competition with civilian employers

(factors 1, 3, and 4 above). Potential recruits, especially the highest quality recruits,

have options other than military service, including civilian employment and higher

education. In confronting these options, individuals make a rough comparison of the

costs and benefits that could be derived from each choice. Increased pay and benefits

for military service would make the choice of enlisting more attractive. The

magnitude of the increase could be scaled to the magnitude of the recruiting shortfall.

Thus, modest recruiting shortfalls could be countered with modest increases in pay

and benefits, while major shortfalls would require more substantial increases.

However, this is usually a very expensive option, as increased pay and benefits usually

apply to the entire force rather than just new recruits. The costs of this approach also

continue even if competition for recruits wanes. Most analysts believe that enlistment

bonuses, which can be targeted solely towards new recruits, are a more efficient way

of improving recruiting than across-the-board improvements in pay or benefits.

Retention

Background. Retention in the military refers to the rate at which military

personnel voluntarily choose to stay in the military after their original obligated term

of service has ended.31 Imbalances in the retention rate can cause problems within the

military personnel system. If too few people stay in, the military will suffer from a

lack of experienced leaders, decreased military efficiency and lower job satisfaction.

If too many people stay in, promotion opportunities decrease and a higher percentage

of people must be involuntarily separated in order to prevent the organization from

becoming “top heavy” with middle and upper level leaders.32

In recent years, concerns have been raised that retention rates in the military

were too low in three areas: the retention rate of enlisted personnel generally, the

retention rate of enlisted and officer personnel in critical specialties, and the retention

rate of officers in certain paygrade. Retention data are presented and analyzed below

to explain the basis for these concerns.

Retention Among Enlisted Personnel Generally. Tables 11 through

14 provide a breakdown of retention data from each of the Services from fiscal year

1989, the last year before the end of the Cold War, to fiscal year 2001. As each of

the Services tracks its retention data in different ways,33 the tables do not lend

For enlisted personnel, the obligated term of service is determined by their initial enlistment

contract (usually three to six years). For officers, the obligated term of service is determined

by rules governing the program through which they receive their commission (usually four or

five years).

Each of these outcomes, in turn, can have a negative impact on recruiting by making the

military a less attractive career option.

Between FY1989 and FY2000, retention computation methodologies varied among the

Services. Retention rates for each of the Services were computed by dividing the “number

(continued...)

CRS-22

themselves to direct comparison. Additionally, as each Service has a unique mission

and force structure, their retention requirements vary substantially. Thus, the data

from one Service should not be directly compared with the data from another

Service. Each data set should be viewed and analyzed individually.

Army. The retention rates for enlisted personnel in the Army are listed in Table

11. The Army tracks retention rates in three categories: initial term (serving in first

enlistment, regardless of length), mid-career (second or subsequent enlistment with

less than ten years of service), and career (second or subsequent enlistment with more

than ten but less than twenty years of service). It states its retention goals in terms

of raw numbers. A review of those numbers indicates that the Army did not meet

many of its retention goals in the first half of the 1990s: it failed to meet its initial term

retention goals in FY1991, 1992, 1993, and 1995; its mid-career retention goals in

FY1991 and 1995; and its career retention goals in FY1991, 1992, 1993, and 1994.

This trend is somewhat surprising in light of the generally declining retention goals

sought during that time-frame; but it is understandable if viewed as a response to the

post-Cold War drawdown. The drawdown was carried out principally between

FY1991 and FY1996 (highlighted in the table). Thus, the lower than expected

retention rates in the early 1990s might well have been the result of soldiers making

rational decisions to avoid the grim career prospects of the drawdown years in favor

of brighter prospects in the civilian world. Additionally, the imperative of reducing

the size of the Army due to drawdown pressures may have made meeting retention

goals a lower priority for Army officials in the early 1990s than it would otherwise

have been.

(...continued)

retained” by the total “loss population.” For the Army, Air Force, and the Marine Corps the

number retained was simply the number who re-enlisted. For the Navy, the number retained

was the number who re-enlisted plus the number who signed a long-term extension to their

current enlistment. With respect to the “loss population,” the Army, Air Force, and Marine

Corps calculated it in essentially the same way: it was simply the total number of people

eligible to re-enlist (whether they actually choose to re-enlist or not). Until 2001, however,

the Navy’s loss population included the total number of people eligible to re-enlist plus those

who were not eligible to re-enlist and who left the service. This difference in computation

methodology made the Navy’s retention rate appear lower than it would have been if

calculated in a manner similar to the other Services. In April 2001, the Navy adopted a

computation methodology that brought it in line with the other Services.

CRS-23

Table 11: Army Retention Rates For Enlisted Personnel,

FY1989-2001

Initial Term

Goal

Achieved

Mid-Career

Goal

Achieved

Career

Goal

Achieved

Year

Number

Percent

Goal

Percent

Eligibles

Number

Percent

Goal

Percent

Percent Percent

Number

Eligibles

Goal Eligibles

FY1989

34400

115%

48.6%

25400

127%

81.6%

28200

108%

74.3%

FY1990

27000

106%

40.7%

20000

158%

81.6%

20000

158%

70.3%

FY1991

21000

97%

41.4%

27000

91%

72.0%

29000

96%

71.8%

FY1992

25321

89%

30.7%

27052

102%

62.5%

29497

92%

61.6%

FY1993

30000

93%

46.1%

25500

100%

75.6%

22000

93%

58.7%

FY1994

22600

109%

49.2%

23000

105%

73.8%

21400

98%

54.4%

FY1995

FY1996

20197

21433

99%

100%

45.6%

46.5%

24551

22671

97%

102%

72.8%

70.0%

27862

28966

102%

98%

58.2%

65.7%

FY1997

23935

102%

54.4%

29699

102%

75.4%

26325

95%

65.5%

FY1998

20542

106%

51.2%

22912

102%

74.1%

18671

96%

60.1%

FY1999

20200

103%

50.3%

23000

105%

75.9%

21800

120%

66.0%

FY2000

20000

107%

49.7%

23200

104%

82.4%

24800

104%

70.6%

FY2001

19750

101%

53.0%

23350

102%

76.3%

20900

102%

66.5%

Source: Department of Defense, Directorate for Officer & Enlisted Personnel

Management

Since FY1996, the last year of the drawdown, the Army has met or exceeded its

retention goals in both its initial term and mid-career categories. However, it

continued to have trouble meeting its retention goals for career personnel until

FY1999. From FY1996 to FY1998, the Army missed its retention goals for career

personnel by between 2 and 5%. Since FY1999, however, the Army has been able

to meet its career retention goal by substantial margins.

Navy. The retention rates for enlisted personnel in the Navy from FY1989-2000

are listed in Table 12. During this time-frame the Navy tracked retention rates in

three categories: first term (serving in first enlistment, regardless of length), second

term (second or subsequent enlistment with less than ten years of service), and career

(second or subsequent enlistment with more than ten years of service). It is important

to reiterate, however, that during this time period the Navy calculated its retention

rate in a way that made its rates appear lower than those of the other Services; thus,

Navy retention rates cannot be directly compared with the retention rates of other

Services.

A review of Navy retention data does indicate an overall decline in retention

rates between fiscal years 1989 and 1999 in all three retention categories. Although

it is not surprising that retention rates for the Navy dropped during the drawdown

years, it is surprising that retention rates continued to decline after FY1996, which is

generally considered to be the last drawdown year. However, the Navy started its

CRS-24

drawdown later than the other Services (its peak drawdown years in terms of declines

in endstrength were FY1994 and 95), and the Navy continued to experience

significant cuts in endstrength even after the principal drawdown years had passed

(Navy endstrength declined by 5% in FY1997 and by 3% in FY1998). Thus, it is

reasonable to conclude that the Navy’s retention rates were affected by the drawdown

for a longer period of time than the other Services.

Additionally, caution must also be used in interpreting these data because the

Navy did not have any formal retention goals during this time-frame. Therefore, it is

difficult to assess the meaning of these retention rates. Was the decline an indicator

of retention problems in the Navy, or was it simply a reflection of force structure

readjustments in the post-drawdown Navy? In all likelihood, it was some combination

of these two explanations, but it is unclear from the data alone. Still, testimony from

senior Navy leaders indicates that the Navy had substantial retention problems with

its enlisted force between FY1996 and FY2000. For example, despite retention levels

substantially higher than those of 1999, the Chief of Naval Operations indicated that

as of June 2001, retention rates were not at a “steady state” level.34

Recently the Navy changed the way it tracks retention. Beginning in FY2001,

it has modified the definitions of its retention categories, set goals for each of them,

and significantly changed the formula by which its retention rates are calculated,

bringing them in line with the formula used by the other Services. The Navy’s new

retention categories are Zone A (17 months to 6 years of service), Zone B (6 to 10

years of service) and Zone C (10-14 years of service). The Navy’s goals and

retention rates for FY2001 are listed in Table 13 below and indicate that the Navy

came very close to meeting its retention goals in FY2001. Nonetheless, the retention

pattern exhibited in previous years, coupled with the comments by Admiral Clark,

suggest that enlisted retention in the Navy may still be a cause for concern.

Statement of Admiral Vernon E. Clark, Chief of Naval Operations, before the Senate

Appropriations Subcommittee on Defense, June 20, 2001.

CRS-25

Table 12: Navy Retention Rates For Enlisted Personnel,

FY1989-2000

(No official goals were set by the Navy during this time)

1ST Term

2ND Term

Career

Achieved

Percent of

Eligibles

Year

37.4%

56.0%

66.9%

FY1989

38.3%

55.7%

70.6%

FY1990

41.4%

58.0%

71.4%

FY1991

FY1992

FY1993

FY1994

FY1995

FY1996

38.9%

34.8%

35.7%

36.4%

32.9%

56.8%

51.9%

47.4%

49.2%

48.9%

65.4%

61.7%

57.7%

56.5%

55.7%

FY1997

FY1998

FY1999

FY2000

30.8%

30.5%

28.2%

29.6%

48.4%

46.3%

43.8%

46.5%

57.5%

54.6%

53.3%

56.6%

Source: Department of Defense, Directorate for Officer & Enlisted Personnel

Management.

Table 13: Navy Retention Rates For Enlisted Personnel, FY2001

Zone A

Zone B

Zone C

Goal

Achieved

Goal

Achieved

Goal

Achieved

Year

Percent of

Eligibles

Percent of

Eligibles

Percent of

Eligibles

Percent of

Eligibles

Percent of

Eligibles

Percent of

Eligibles

FY2001

57%

56.9%

69%

68.2%

89%

84.6%

Source: Department of Defense, Directorate for Officer & Enlisted Personnel

Management.

CRS-26

Marine Corps. The retention rates for enlisted personnel in the Marine Corps

are listed in Table 14. The Marine Corps also tracks retention rates in three

categories: first term (serving in first enlistment, regardless of length), second term

(second or subsequent enlistment with less than ten years of service), and career

(second or subsequent enlistment with more than ten but less than twenty years of

service). Since FY1992, the Marine Corps has set retention goals, which are stated

as a percentage of those eligible for retention, for its first term personnel. However,

it has not set goals for second term or career personnel, which makes evaluating the

retention data in these categories difficult. A review of the data for first term

personnel indicates that the Marine Corps had some difficulty meeting its goals during

the post-Cold War drawdown, but recovered in subsequent years. In fiscal years

1998 through 2001, the Marine Corps essentially met its retention goals for first term

personnel. It appears that a similar trend occurred in the second term and career

categories: retention rates dropped during the drawdown, followed by a gradual

upswing that eventually produced retention rates higher than those immediately before

the drawdown. Indeed, second term retention rates in FY2001 are about 13

percentage points higher than those in FY1989, and career retention rates for FY2001

are about 19 percentage points higher than those of FY1989.

Table 14: Marine Corps Retention Rates For Enlisted Personnel,

FY1989-2001

Year

(percent of eligibles)

1ST TERM

2ND TERM CAREER

Goal

Achieved

FY1989

FY1990

FY1991

26.3%

29.9%

21.3%

47.7%

54.7%

47.5%

77.2%

78.7%

72.4%

FY1992

FY1993

FY1994

FY1995

FY1996

22-26%

19.3%

17.2%

19.4%

20.5%

22.0%

43.8%

46.6%

42.5%

43.8%

46.5%

71.2%

74.0%

73.7%

73.1%

77.5%

FY1997

FY1998

FY1999

FY2000

FY2001

22-26%

26.3%

26.8%

21.4%

21.8%

23.8%

26.6%

26.7%

45.8%

47.1%

47.5%

63.4%

60.4%

80.2%

80.4%

95.6%

96.1%

Source: Department of Defense, Directorate for Officer & Enlisted Personnel

Management.

CRS-27

Air Force. The retention rates for enlisted personnel in the Air Force are listed

in Table 15. The Air Force tracks retention rates in three categories: first term

(serving in first enlistment, regardless of length), second term (second or subsequent

enlistment with less than ten years of service), and career (second or subsequent

enlistment with more than ten years of service and up through the point where

retirement papers are approved). The Air Force sets retention goals stated in

percentage terms. A review of the retention data for the Air Force indicates that it

has had some difficulty meeting its retention goals in recent years.

Throughout most of the 1990s, the Air Force rarely had difficulties meeting or

exceeding its retention goals. However, that pattern changed toward the end of the

decade. The Air Force did not meet its retention goals for first term personnel in

FY1998 - 2000; for second term personnel in FY1997 - 2001; and for career

personnel in FY1998 - 2001. The shortfall was most pronounced with respect to

second term personnel where the Air Force fell short of its goal by about six

percentage points per year.

Table 15: Air Force Retention Rates For Enlisted Personnel,

FY1989-2001

FY1989

FY1990

FY1991

FY1992

FY1993

FY1994

FY1995

FY1996

FY1997

FY1998

FY1999

FY2000

FY2001

1ST TERM

Goal Achieve

55%

59.0%

55%

52.0%

55%

59.0%

55%

58.0%

55%

61.0%

55%

59.0%

55%

63.0%

55%

59.0%

55%

56.0%

55%

53.9%

55%

49.1%

55%

52.0%

55%

55.4%

2ND TERM

Goal Achieve

75%

76.0%

75%

69.0%

75%

77.0%

75%

76.0%

75%

82.0%

75%

81.0%

75%

77.0%

75%

76.0%

75%

71.0%

75%

69.0%

75%

69.4%

75%

68.8%

75%

68.8%

CAREER

Goal Achieve

95%

96.0%

95%

93.0%

95%

95.0%

95%

96.0%

95%

97.0%

95%

96.0%

95%

96.0%

95%

95.0%

95%

95.0%

95%

93.0%

95%

92.0%

95%

90.6%

95%

90.6%

Source: Department of Defense, Directorate for Officer & Enlisted Personnel

Management

Retention In Critical Specialties. In addition to concerns about overall

retention patterns among enlisted personnel, there has been ongoing concern about

the military’s ability to retain people – both officers and enlisted personnel – in certain

key occupational specialties. Retention of pilots has been a highly publicized area of

CRS-28

concern for years,35 but significant concerns have also been raised about retention in

fields such as communications, intelligence, maintenance, electronics, information

technology, and the health professions.

This shortfall appears to have gotten worse, at least in some specialties, in the

post drawdown era. A report issued by the General Accounting Office (GAO) in

March of 2000 compared retention rates at the occupational level in the 1988-1990

and 1996-1998 time-frames. The study found that substantial drops in retention had

occurred among enlisted personnel in a number of critical specialties and that smaller

drops had occurred among officers as well. The more severe declines for enlisted

personnel occurred in the intelligence field (retention rate down 16 points in the Army

and 11 points in the Air Force), data processing (down 10 points in the Army, 11

points in the Navy, and 15 points in the Air Force), and air crews (down 20 points in

the Navy and 14 points in the Air Force).36

According to this same report, reductions in retention rates among officers

occurred as well. However, these reductions occurred in a lower proportion of

occupational fields and the declines were, on average, substantially smaller than those

among enlisted personnel. Additionally, the fields where the declines occurred varied

substantially among the different Services. In the Army, retention rate declines of

between 3 and 5% occurred among officers in the fields of nursing, dentistry, health

service administration, automotive maintenance, data processing, and fiscal

administration. In the Navy, declines of between 3 and 4% occurred in the fields of

ordnance and electronics, and in some supply related fields. In the Air Force, declines

of 3 to 5% occurred in the fields of counterintelligence, electronics, missile

maintenance, fiscal administration, psychology, and rotary wing aviation (helicopter

pilots). In the Marine Corps, declines of 3 to 4% occurred in the fields of intelligence,

electronics, supply, and aircraft crew operations.37

Retention In Certain Grades Of Officers. A final area of concern in

recent years has been the retention of officers in the O-3 and O-4 paygrades (These

paygrades correspond to the ranks of Captain and Major in the Army, Air Force, and

Marine Corps; Lieutenant and Lieutenant Commander in the Navy). These officers

are important in several respects: their large numbers make them a “center of gravity”

of the officer corps; they often function in key front line leadership roles; and they are

the pool from which the senior military leaders of the future will be drawn. In recent

years, there have been reports that retention among these officers has been declining,

perhaps precipitously. For example, one recent news article stated that “Anecdotal

reports to DOD officials suggest Army, Air Force, and Marine Corps captains and

Pilot retention is a very specialized issue that is largely dependent on the hiring status of

commercial airlines. For more information on this topic, see CRS Report 98-764, Military

Pilot Retention: Issues and Options, by Mike Ryan.

GAO Report to Congressional Requestors, Military Personnel: Systematic Analyses Needed

to Measure Retention in Key Careers and Occupations, March 2000, page 19.

GAO Report to Congressional Requestors, Military Personnel: Systematic Analyses Needed

to Measure Retention in Key Careers and Occupations, March 2000, pages 62-63.

CRS-29

Navy lieutenants are leaving the military in numbers not seen since 1973....”38 An

April 2000, article stated that “Dissatisfied younger Army officers are leaving the

service in droves, worrying the service’s leadership and provoking intense debates

about the problem at military bases across the nation.”39 An analysis of retention data

indicates that these assertions are overstated for officers in the O-3 paygrade, but do

not appear accurate for those in the O-4 paygrade.

The continuation rates40 of officers in paygrade O-3 are displayed in Table 16

and broken out by Service and fiscal year. The pattern is quite similar for each

Service: all show a drop in continuation rates early in the drawdown, a recovery

several years later, followed by another drop off in more recent years. For all

Services, the continuation rate for 0-3 officers was lower in FY2000 than in FY1989.

However, this decline was more pronounced in the Army than in the other Services.

The Army’s continuation rate in FY2000 was 3.4 percentage points lower than it was

in FY1989, compared with a 2.6 percentage point decline in the Air Force, a 2.1

percentage point decline in the Navy, and a 0.7 percentage point decline in the Marine

Corps. While these declines appear to be small, their impact on the officer corps can

be larger due to the numbers of officers in the 0-3 paygrade. For example, if the

Army’s continuation rate for captains were the same in FY2000 as it had been in

FY1989, it would have kept about 725 more of them on active duty then actually

occurred. If the Air Force’s continuation rate for captains were the same in FY2000

as it had been in FY1989, it would have kept about 670 more of them on active duty.

Although the change in the Navy’s continuation rate for 0-3 officers between

FY1989 and FY2000 has been less than that of the Army and Air Force, the Navy’s

continuation rate for these officers is troubling for another reason: its showed less of

a recovery after the “drawdown drop” then the other Services did. Although all the

Services showed a significant drop in continuation rates in FY1992 and 1993, most

recovered strongly in subsequent years. The Army and Air Force saw their

continuation rates rebound in FY1994, and the Marine Corps continuation rate began

to improve in FY1995. The Navy, however, did not see a turnaround in its 0-3

continuation rate until FY1996, and the recovery proved short-lived: continuation

dropped in FY1997, 1998, and 1999. Thus, the Navy’s decline in 0-3 continuation

rates, while not as large as the Army’s, may be a greater problem as it did not recover

as robustly from the lows of the drawdown era. The Navy’s 0-3 continuation rate

in FY1999 was actually lower than in any year of the drawdown era.

Jim Garamone, “DOD Examines Captain/Lieutenant Retention,” American Forces Press

Service, May 17, 2001.

Thomas E. Ricks, “Younger Officers Quit Army At Fast Clip,” The Washington Post, April

17, 2000, p 1.

Continuation rates are the measure of retention commonly used with commissioned officers.

Unlike enlisted personnel, officers do not sign enlistment and re-enlistment contracts for

specified periods of time; they may resign at any time after the end of their service obligation

(usually four or five years after commissioning). As such, continuation rates – which

measure the percentage of officers who continue in the service from one year to the next – are

commonly used to measure their retention.

CRS-30

Thus, with the exception of the Marine Corps – whose continuation rates have

recovered to nearly the same level as before the drawdown – the data indicate that

continuation rates for officers in the 0-3 paygrade are an area of concern. This

concern is magnified by the possibility that the overall retention data presented here

may mask troubling shifts in voluntary separation of officers in the O-3 pay grade

versus involuntary separation. One study by the Army indicates that voluntary

separation has climbed significantly for Army captains in a recent five year period,41

while the proportion of involuntary separations has decreased. This has led some to

infer that fewer officers are being released for substandard performance, which might

indicate a decline in the quality of the officers being retained. Nonetheless, in light of

the currently available data, the assertion that there has been a massive exodus of

officers in the O-3 paygrade does not appear to be supportable.

Table 16: Active Duty O3 Officer Continuation Rates by Service,

FY1989-2000

FY1989

FY1990

FY1991

FY1992

FY1993

FY1994

FY1995

FY1996

FY1997

FY1998

FY1999

FY2000

% Army % Navy

92.0

88.2

91.4

88.5

94.0

89.2

86.7

87.3

84.3

87.2

89.3

86.2

90.3

86.0

90.2

88.6

90.8

87.7

90.7

86.4

88.8

85.5

88.6

86.1

Marine

Corps

89.2

90.4

88.5

88.0

85.4

90.8

89.2

87.1

89.2

88.5

% Air

Force % DOD

91.5

90.8

90.5

90.3

91.5

91.7

87.3

87.2

84.6

85.3

93.7

90.0

90.6

89.3

91.4

90.2

91.1

89.9

90.0

89.2

88.1

88.9

88.0

Source: Department of Defense, Directorate for Officer & Enlisted Personnel

Management.

The retention rates of officers in paygrade 0-4 between FY1989 and FY2000 are

displayed in Table 17. The pattern of retention rates for these officers is slightly

different from that exhibited by officers in the 0-3 paygrade: retention rates changed

little between FY1989 and FY1991, dropped from about FY1992 to FY1994 and

recovered from about FY1995 to FY1998. Since FY1998, the continuation rates

have shifted somewhat from year to year, but have remained at or slightly below the

level they were at during the pre-drawdown time-frame. This pattern is consistent

with the imperatives of the drawdown: voluntary and involuntary separations induced

a decline in retention rates as the drawdown era began, followed by a recovery of

Taken from briefing slides of “Commander’s Conference,” presented by Lieutenant General

Timothy Maude, Army Deputy Chief of Staff for Personnel, October 19, 2000.

CRS-31

retention rates as the drawdown era came to a close. While continuation rates for

officers in the O-4 paygrade deserve continued observation, the data do not indicate

a significant shortfall in aggregate O-4 retention rates as of FY2000.

Table 17: Active Duty O4 Officer Continuation Rates by Service,

FY1989-2000

FY1989

FY1990

FY1991

FY1992

FY1993

FY1994

FY1995

FY1996

FY1997

FY1998

FY1999

FY2000

% Army

94.4

94.2

87.9

88.3

88.5

89.0

87.5

90.2

94.5

94.2

93.8

% % Marine

Navy

Corps

92.1

93.1

91.1

92.4

92.0

92.7

91.2

91.6

90.7

91.5

81.6

90.0

89.0

93.2

90.3

91.4

90.7

91.6

92.8

91.4

89.1

91.6

91.0

92.1

% Air

Force. % DOD

92.0

92.8

92.0

92.5

92.3

92.9

89.4

89.5

89.4

89.5

84.5

85.4

86.8

88.5

89.4

89.2

89.8

90.3

91.0

92.6

91.3

91.7

90.6

91.9

Source: Department of Defense, Directorate for Officer & Enlisted Personnel

Management.

Perceived Causes. Aggregate retention rates in the military are the product

of thousands of individual decisions on whether or not to stay in the military. These

individual decisions, analysts believe, are based on the individual’s answer to one basic

question: “Would I be better off if I stayed in or left the military?” The question,

while simple to state, can be an extraordinarily complex one to answer, as the

definition of “better off” entails a broad array of factors including pay and benefits,

job satisfaction, and quality of life. Some of these factors, like pay, are tangible and

can be quantified and compared with civilian jobs.42 Others, like quality of life, are

less tangible and can be very difficult or impossible to quantify and compare with

civilian life. Additionally, different individuals attach different levels of importance

to these various factors. Given the exact same environment, the answer to the

question “Would I be better off if I stayed in or left the military?” will be answered

differently by different people depending on their personal priorities. Thus, it is

impossible to identify some sort of objective “tipping point” that leads military

personnel to decide for or against continued service.

However, based on survey research, focus groups, and individual interviews it

is possible to get a general idea of the most important factors affecting retention

decisions at a given point in time. The factors most commonly cited as the “causes”

of recent military retention shortfalls are identified and discussed below. These

Although, as discussed previously with respect to the “pay gap,” attempts to do this can be

a very controversial.

CRS-32

factors are not mutually exclusive and should not be seen as competing explanations,

but instead as partial answers to the question “Why have the military Services

experienced retention shortfalls?” Additionally, the factors are not necessarily listed

in order of importance, for it is not entirely clear what the relative importance of

these factors is. Finally, it should be pointed out that Congress and the executive

branch have already taken a number of steps to address these issues. They are listed

in the next section.

Perceived Cause # 1: Relative Value of Pay and Benefits. In a 1999

survey of active duty personnel administered by the Department of Defense,

respondents were asked to choose the “most important factor for leaving or

considering leaving active duty.” The most commonly cited response was basic pay

(28.2%). Indeed, many commentators have argued that the major reason for the

military’s recent retention shortfalls is the gap between military pay levels and civilian

pay levels. As pointed out in the previous section on recruiting, there is robust debate

among compensation analysts over whether such a “pay gap” actually exists,43

however, it is clear that the vast majority of military personnel believe that it does.

In the 1999 survey just mentioned, two-thirds of the respondents indicated that they

would receive a better total compensation package (pay, benefits, bonuses, and

allowances) in the civilian world than they were receiving in the military.

Contributing to this belief may be the well publicized manner in which military

pay raises were calculated throughout most of the 1990s. Since 1967, federal law has

provided that military pay be adjusted upward, at the same time and by the same

percentage, as the average increase in the pay rates for federal General Schedule (GS)

employees.44 In 1990, Congress enacted a statutory formula for federal civilian pay

raises that, beginning in fiscal year 1992, provided for an annual increase of 0.5% less

than the annual increase in the private sector wages and salaries component of the

employment compensation index (ECI).45 Thus, by statute, military pay raises were

supposed to be determined by the an “ECI minus 0.5%” formula (although this was

not always the case in fact).46 As the ECI is considered a standard measure of the rate

at which civilian compensation rates are increasing, military personnel likely saw the

“ECI minus 0.5%” formula as evidence that their wages were not keeping up with

those of private sector employees.

Another factor cited by some as contributing to military retention shortfalls was

changes in military benefits, most notably retirement pay. A major change was made

See CRS Issue Brief IB10089, Military Pay and Benefits: Key Questions and Answers by

Robert Goldich.

The Uniformed Services Pay Act of 1967, P.L. 90-207, December 16, 1967. Codified at

37 USC 1009.

The Federal Employees’ Pay Comparability Act of 1990, P.L. 101-509, November 5, 1990.

Codified at 5 USC 5303.

Despite this statutory formula, which could operate each year without any intervention,

Congress passed laws that mandated specific pay raises for the military each year. In general,

these pay raises were identical to that determined by the “ECI minus 0.5%” formula, although

Congress specified pay raises higher than the statutory formula in FY1997 and FY1999.

CRS-33

to the military retirement system in 1986. Under the Military Retirement Reform Act

of 1986, military personnel who first entered military service on or after August 1,

1986 would receive a less generous retirement plan than those who first entered

military service before that date. The new retirement plan, known as “Redux,” was

unpopular among the servicemembers who fell under its provisions.47 Although no

one actually received reduced benefits under this plan – compulsory Redux was

repealed in 1999,48 seven years before the first Redux payments would have been

made – some have argued that the existence of Redux had a negative effect on

retention rates in the later half of the 1990s. From this perspective, the diminished

retirement benefit available to Redux eligible servicemembers did not provide a

sufficient incentive for them to stay in the military for a full career. It does not appear

that researchers have been able to document an empirical link between Redux and

lower retention rates.

Retirement benefits are also cited as a special concern for personnel in critical

occupational specialties. In a survey conducted in 1998 and 1999,49 officers in critical

skill specialties who indicated an intention to leave the military picked retirement pay

as one of the top reasons for leaving the military, along with frequency of

deployments. For enlisted personnel in critical specialties, basic pay was the most

important reason for leaving the military, but retirement pay was tied with frequency

of deployments for second place.50 These concerns about retirement pay can probably

be attributed – at least in part – to the same concerns about Redux that other

servicemembers may have had at that time. However, another cause of this concern

about retired pay may be the way in which retired pay is calculated, and the impact

this has on people in critical skill specialties.

Depending on when a person first entered military service, retired pay is based

on either the level of basic pay that the servicemember earned just prior to retirement

or on the average of the highest 36 months of basic pay that the servicemember has

received during his or her career. Regardless of which formula is used, however,

basic pay is the only aspect of total compensation that is included in the calculation:

special pays and bonuses are omitted. This is significant for those in critical

specialties because they often receive very large bonuses or special pays as an

incentive to keep them in the service. Although these bonuses and special pays may

substantially increase their average monthly pay while on active duty, it does not

enhance their retirement pay. Thus, the value of their retirement pay is relatively low

Nonetheless, even under Redux, military retirement would compare quite favorably with

most civilian retirement systems, as it continued to contain a distinctive feature: eligibility for

retired pay after 20 years of service, regardless of age.

P.L. 106-65, sections 641-644. The law repealed compulsory Redux and gave military

personnel the option of retiring under the old, more generous, pre-Redux retirement pay

computation formula, or retiring under Redux with an immediate cash bonus.

General Accounting Office Report (GAO/NSIAD-99-197BR), Perspectives of Surveyed

Service Members in Retention Critical Specialties, August, 1999.

General Accounting Office Report (GAO/NSIAD-99-197BR), Perspectives of Surveyed

Service Members in Retention Critical Specialties, August, 1999, p 25

CRS-34

in comparison to their active duty pay, and this may decrease the perceived value of

staying in the military long enough to receive retirement benefits.

Perceived Cause #2: Lower Quality of Life. Many servicemembers and

outside observers believe that there has been a decline in the quality of life associated

with military service in the post-Cold War era. During the Cold War era, the United

States was focused primarily on containing the spread of communism, with a

particular emphasis on protecting Europe from a potential Soviet invasion and

protecting South Korea from a potential North Korean invasion. To facilitate this

military posture, major bases were maintained in Western Europe and Asia. Military

personnel stationed at these overseas bases had demanding jobs, but great efforts

were made to provide servicemembers with a “normal” life. For example, overseas

bases typically had most of the amenities of stateside bases and servicemembers’

families were usually allowed to accompany them.

With the end of the Cold War, however, the situation changed dramatically.

Although many overseas bases were closed and a large number of servicemembers

were transferred to stateside bases, U.S. military operations around the globe grew.

In the absence of the Soviet threat, the U.S. began to focus more on peacekeeping

and humanitarian missions in underdeveloped parts of the world. Deployments on

these missions typically took servicemembers away from their families for six to nine

months and sent them to places with comparatively primitive infrastructures.

Additionally, as the number of these military commitments increased during the 1990s

and as the size of the military decreased during the drawdown, the pace of

deployments for individuals increased.51 This put new pressures on servicemembers,

as the time spent on mission preparation, deployment, and post-deployment

reconstitution activities decreased the amount of leisure and family time available.

Nonetheless, military deployments do not always correlate with lowered

retention rates. For example, non-commissioned officers (NCOs) in the Army’s V

Corps reportedly have a higher retention rate than NCOs in the other three Army

Corps, despite V Corps higher rate of deployment.52 Most studies indicate that,

provided they are well managed and not excessive, deployments can enhance retention

by providing participants with a sense of accomplishment.53 However, these studies

also indicate that after a certain threshold level, deployments can have a negative

effect on retention.

Another quality of life issue that has been raised in recent years is the quality of

housing used by military personnel and their families. In the military, servicemembers

either live free of charge in military housing or receive an allowance to pay for civilian

See CRS Report 98-41, Military Readiness, Operations Tempo (OPTEMPO) and

Personnel Tempo (PERSTEMPO): Are U.S. Forces Doing To Much?, by Mike Ryan, p. 29.

Eric B. Pilgrim, “V Corps Tops On NCO Retention,” Stars and Stripes, August 28, 2001.

See for example James Hosek and Mark Totten, Does Perstempo Hurt Reenlistment? The

Effect of Long or Hostile Perstempo on Reenlistment, RAND, 1998; Paul Sticha, Paul Hogan

and Maris Diane, Personnel Tempo: Definition, Measurement, and Effects on Retention,

Readiness and Quality of Life, Army Research Institute, 1999; and Peter Francis, OPTEMPO

and Readiness, Center for Naval Analysis, 1999.

CRS-35

housing. Military housing, although free, has often been criticized for being old and

poorly maintained. Recently, for example, a senior defense official testified before

Congress that, “over two-thirds of our [DOD] housing inventory in the United States

is substandard”54 and Air Force General Joseph Ralston, commander in chief of the

U.S. European Command, recently stated “although we continue to make progress

as a whole, family housing throughout Europe remains old, is in need of extensive

repair and modernization and is well below contemporary standards in the U.S.”55

Those who receive a housing allowance (known as Basic Allowance for Housing or

BAH) in lieu of military housing usually have greater flexibility in selecting well

maintained housing with modern amenities. However, as BAH currently covers

92.5% of the average rental cost of civilian housing that meets DOD standards,

servicemembers receiving BAH are essentially forced to choose between accepting

lower-cost, below average housing or paying money “out of pocket” to live in better

accommodations. Recently, the senior enlisted members from each of the military

Services testified that quality of housing was a major quality of life concern for their

members.56 The Department of Defense is in the midst of a multi-year plan to raise

BAH to 100% of the average rental cost, but it will not be completed until 2005.

Perceived Cause #3: Decreased Job Satisfaction. Retention shortfalls

may also be attributed to a decrease in the level of “job satisfaction” reported by

military personnel. Some of the common reasons cited for this decline in job

satisfaction include unhappiness with the actions of military superiors, a lack of

enthusiasm for the new missions undertaken by the military in the post Cold War era,

difficulties in accomplishing assigned tasks due to lack of resources, and disapproval

of changes in the military culture. Each of these topics is discussed in more detail

below.

Dissatisfaction with Leadership. A commonly repeated complaint in recent

years, especially among lower level officers, has been that their supervisors

“micromanage” them, do not properly mentor them for more challenging assignments,

and punish them with career ending evaluations for comparatively minor mistakes.

Though this type of complaint is not new to the military Services, some factors may

have exacerbated the issue in recent years, including the more competitive promotion

environment that emerged during the drawdown, which may have promoted excessive

risk avoidance behaviors on the part of some leaders; more extensive and critical

media coverage of the behavior of members of the military, which may prompt leaders

to monitor and control their subordinates more closely; and advances in

communications technologies, which allow superiors at all levels to keep closer track

of subordinates.

Undersecretary of Defense Randall Yim, Testimony before the House Appropriations

Subcomittee on Military Construction, March 15, 2001.

Rick Maze, “Ralston Decries Conditions At European Bases,” Army Times, February 14,

2002.

Testimony of before the House Appropriations Subcommittee on Military Construction,

March 8, 2001.

CRS-36

Changing Mission. During the Cold War era, the mission of the armed forces

was clearly defined – protect the free world from communism – and unmistakably

oriented towards fighting a massive war. For many, the knowledge that they were

defending the nation and its allies from a major threat was psychologically rewarding

in itself. In the post-Cold War era, the military’s mission shifted toward peacekeeping

and humanitarian relief operations. While these types of missions certainly have their

own psychological rewards and were appealing to many military personnel, some may

have found them less rewarding and not important enough to justify the sacrifices of

military life. This factor is probably irrelevant now, however, as the recent terrorist

attacks on the United States and the ongoing operations in Afghanistan have

dramatically reemphasized the military’s mission of defending the nation.

Lack of Resources. Another complaint revolves around shortages of

resources necessary to accomplish assigned missions. Some of the resource shortages

cited as interfering with mission accomplishment include: insufficient personnel

assigned to the unit, a lack of required equipment, shortages of spare parts to repair

needed equipment, and a lack of fuel, ammunition, and training areas to perform

realistic training. Most of these shortages can be attributed to budgetary decisions,

although personnel issues are also linked more broadly with recruiting, retention,

training and assignment policies, and training area issues are linked with base closure

and environmental protection issues as well.

Changing Military Culture. A final cluster of issues cited in relation to job

dissatisfaction revolve around the ongoing changes in the military’s internal culture

and its relationship to the culture of the civilian world. The culture of the military is

unique and, in many ways, stands in sharp contrast to the broader American culture:

the military is hierarchical, not egalitarian; it is regimented in areas where civilians

expect liberty; decision making is typically “top down,” rather than democratic.

Although many Americans would find this type of environment oppressive, others find

it quite rewarding, for it can instill a strong sense of purpose, promote deep

interpersonal bonds and create a powerful sense of community. Those who do enjoy

the unique culture of military life naturally want to see it preserved and express

dissatisfaction when they think that it is being changed for the worse.

Complaints that the military way of life is changing for the worse are nothing

new, but they may have been more highly publicized in the 1990s due to related

policy disputes at the federal level. Some servicemembers resented attempts by

policymakers to allow homosexuals to serve in the military, to allow women to serve

in combat, or to change military rules prohibiting adultery and fraternization. Others

perceived a de-emphasis on traditional military values like courage, fidelity, and selfsacrifice and an increased focus on values like tolerance and compassion.57

For examples of these perspectives, see opinions contained in Joseph C. Myers,

Legitimization and Tolerance: Not the Same, Army, July, 1993, 37-39; James Webb, The

War on Military Culture, The Weekly Standard, January 20, 1997, 17-22; Adam G.

Mersereau, Diversity May Prove Deadly on the Battlefield, The Wall Street Journal,

November 14, 1996, A22; Tranette Ledford, Many Soldiers Unhappy With Fraternization

Proposals, Army Times, January 18, 1999, 7; Stephanie Gutmann, Today’s Army: Warriors

(continued...)

CRS-37

The Congressional Response. In recent years, Congress has passed a

number of laws aimed at improving military retention. Perhaps the most visible of

these initiatives has been a string of military pay raises and the repeal of the “Redux”

retirement plan. Other legislative initiatives include pay table reform, increased

funding for reenlistment bonuses, and increased ceilings on reenlistment bonuses and

incentive pays.

With respect to pay, Congress passed a law in 1999 that suspended the “ECI

minus 0.5%” formula (discussed previously) and replaced it with an “ECI plus 0.5%”

formula for the period FY2001-2006. Under this new formula, military personnel will

receive pay raises one half of a percent higher than the ECI and a full one percent

higher than they would have under the old formula. Assuming that it is fully

implemented, this policy will increase the basic pay of military personnel relative to

civilian occupations; additionally, it will probably help dispel any negative perceptions

generated by the “ECI minus 0.5%” formula. Congress also approved a “pay table

reform” initiative in 1999 that increased the pay of certain enlisted personnel and

officers. The change was most beneficial for mid-career officers, providing extra pay

to those officers at precisely the time in their careers when they make their most

important retention decisions. It was also beneficial to some junior and mid career

enlisted personnel, although they received smaller increases than the officers.

Another major retention initiative passed by Congress in 1999 was the repeal of

the Redux military retirement system. As mentioned previously, the Military

Retirement Reform Act of 1986 made major compulsory cuts in the future retired pay

of those people who first entered the military on or after August 1, 1986. The

National Defense Authorization Act for FY2000 repealed the compulsory nature of

those cuts by providing affected military personnel with the option, upon reaching 15

years of service, of electing retirement under the old, pre-Redux system, or retirement

under the Redux system with a substantial cash bonus.58

(...continued)

Vs. Schoolmarms, The Wall Street Journal, May 9, 2000.

Another major change to the military retirement system recently approved by Congress

allows members of the military to participate in the federal Thrift Savings Plan (TSP). The

TSP, which is similar to the 401(K) plans offered by private corporations, allows participants

to invest pre-tax dollars in a special account where the invested money and any earnings are

not taxed until they are withdrawn. Beginning in late 2001, military personnel were allowed

to contribute up to 5% of their base pay to their TSP. In addition, they can contribute all or

part of any special or incentive pay they earn, provided their total contibutions do not exceed

the limits set by the Internal Revenue Service. This latter provision is considered to be

especially attractive to those military personnel serving in retention critical specialities. These

people often receive large retention bonuses or incentive pays to encourage them to continue

military service; however, these bonuses and special pays are not considered to be part of the

salary base for calculating retired pay. By allowing these people to deposit all or part of their

bonuses and special pays in a TSP, they can enhance their retirement income. At this point,

however, the effect of the TSP on military retention is unclear. Some have argued that it will

have a negative effect on retention by providing military personnel with a sufficient retirement

“nest egg” to leave the service after ten or fifteen years.

CRS-38

Congress has also responded to retention shortfalls in the military by substantially

increasing the amount of money available for re-enlistment bonuses, officer retention

bonuses, and various special and incentive pays. For example, Congress provided

more money than the Services requested for Selective Reenlistment Bonuses in fiscal

years 1999-2001. The 106th Congress increased the maximum amount of the active

duty re-enlistment bonus from $45,000 to $60,000 and established a special retention

bonus for members of armed forces qualified in critical military skills.59 The 106th

Congress also established, extended and/or increased bonuses, special pays, and

incentive pays designed to retain personnel in critical military occupations such as

aviation, health care, special warfare, and naval surface warfare.60 The 107th Congress

authorized an accession bonus of up to $100,000 for new officers in certain critical

skill areas and provided authority to the Services to allow the transfer of GI Bill

benefits from an enlisted person in a critical skill areas to certain family members as

a reenlistment incentive.61

The Executive Branch Response. The executive branch has been very

involved in developing policies aimed at improving military retention. In addition to

recommending and/or supporting the legislative policy changes mentioned above, the

various military Services have also enacted administrative policies designed to

improve retention rates. The most notable of these efforts have been those directed

toward better managing personnel tempo 62 (PERSTEMPO), reducing manpower

shortages in units, and improving military housing.

Perhaps the most well known PERSTEMPO management initiative has been the

implementation of the Expeditionary Aerospace Force (EAF) concept by the Air

Force. The EAF, established in 1999, established ten “packages” of Air Force units,

known as Aerospace Expeditionary Forces (AEFs). At any given time, two of these

AEFs are “on call” for deployment to handle ongoing military operations; the other

eight are conducting normal training and operations. Every three months, two new

AEFs rotate into “on call” status. This system provides Air Force personnel with

greater stability, provides more planning time for deployments, and better distributes

the burden of deployment throughout the Air Force.

P.L 106-65, section 618, National Defense Authorization Act For FY2000, October 5, 1999.

P.L. 106-398, section 633, National Defense Authorization Act For FY2001, October 30,

2000.

P.L 106-65, section 612-629, National Defense Authorization Act For FY2000, October 5,

1999. P.L. 106-398, sections 622-634, National Defense Authorization Act For FY2001,

October 30, 2000.

P.L. 107-107, section 621 and 654, National Defense Authorization Act For FY2002,

December 28, 2001.

Personnel Tempo, or PERSTEMPO, is the rate at which military personnel are deployed

away from their home station. Until recently, this was usually measured on a unit basis,

rather than an individual basis. However, due to a 1999 law passed by Congress (P.L.10665), each of the Services now track the personnel tempo of each individual. This rate of

individual personnel tempo is commonly referred to as ITEMPO. ITEMPO is simply a

specific way of measuring PERSTEMPO.

CRS-39

Another important PERSTEMPO management tool has been the increased use

of Reserve Component forces, especially by the Air Force and the Army. In the Cold

War era (1946-1989), reservists were involuntarily activated for federal service in

military operations63 four times, an average of about once every decade. In the post

Cold War era (1990-2001), reservists have been involuntarily activated for federal

service in military operations six times, an average of about once every two years

Additionally, the Services are also making increased use of reserve volunteers to help

them conduct operational missions. Moreover, reserve units are increasingly being

tasked with missions formerly reserved for active duty units. For example, the Army

made a historic decision when it selected the 49th Armored Division from the Texas

Army National Guard to serve as the headquarters element for the Bosnian

peacekeeping mission in 2000. The Army also selected six other Army National

Guard units to serve as the headquarters element in Bosnia during later rotations.

More recently, a National Guard infantry battalion was mobilized to take part in the

Multinational Force and Observers mission in the Sinai, a mission normally performed

by active component forces.

Another area where the Services have taken action is in attempting to reduce

manpower shortages in units. All of the Services have become more aggressive in

bringing former military personnel and reservists onto active duty. Different ways of

using existing manpower are also being tried. For example, the Army launched a

“man the force” initiative designed to fill combat divisions by transferring individuals

from non-combat units, such as the Training and Doctrine Command, to billets in the

Army’s divisions, armored cavalry regiments, and certain “early deploying” units.

Improving military housing has been designated as a top priority by the

Department of Defense and the various Services. As mentioned previously, the

Department of Defense is in the midst of a multi-year plan to raise the Basic

Allowance for Housing to 100% of the average rental cost. DOD has also requested

substantial increases in the amount of money appropriated for military housing in

FY2002. In comparison to the funds appropriated in FY2001, DOD requested a 60%

increase in military construction funds for barracks, dormitories, and similar facilities,

and requested a 13% increase in funds for family housing. Congress approved these

requests and added funds for additional housing projects.64 Finally, the Services are

also making increased use of their authority under the Military Housing Privatization

Initiative, a congressionally authorized program, to produce commercially owned and

operated housing for military personnel.65

This category excludes those reservists who served on active duty under voluntary orders

or annual training orders and excludes members of the National Guard serving in a state

status. Additionally, with the exception of those mobilized in response to the terrorist attacks

of September 11th, it excludes involuntary activations of reservists for domestic reasons, such

as responding to civic disorders. For more information on this topic, see CRS Report

RL30637, Involuntary Reserve Activations For U.S. Military Operations Since World War

II, by (name redacted).

P.L. 107-64, Military Construction FY2002 Appropriations Act, November 5, 2001.

For more information on the Military Housing Privatization Initiative, see CRS Report

RL31039, Military Housing Privatization Initiative: Background and Issues, by Daniel H.

(continued...)

CRS-40

Results. The retention initiatives taken by both Congress and the executive

branch appear to be bearing some positive results, but there are still areas of concern.

With respect to retention of enlisted personnel generally, the Army and the Marine

Corps appear to be doing fairly well; however, the Air Force continues to experience

retention rates that fall short of its 2nd term and career goals, and Navy retention rates,

while improving in FY2001, still bear watching. With respect to retention in critical

specialties, the available data indicate that this continues to be a cause of concern for

the military. Recent increases in reenlistment bonuses, officer retention bonuses, and

various special and incentive pays, along with the general slowing of the economy and

the surge in patriotism following the September 11th terrorist attacks, have probably

mitigated this problem somewhat, but the proof (i.e. the data) is not yet in. With

respect to officers in the O-3 paygrade, there has been no massive exodus from the

services in recent years, but they are exhibiting a somewhat lower than normal

retention rate. Retention rates for officers in the 0-4 paygrade are little different than

they were before the drawdown began.

Factors That Could Cause Shortfalls in the Future. Despite the recent

improvements in military retention, a number of factors could change these trends.

Perhaps the most significant is the increasingly demanding retention environment

created by the small cohorts of new accessions brought in during the drawdown era

of the 1990s. Other variables include future PERSTEMPO levels and the state of the

economy. Each of these is discussed below.

Factor #1: Comparatively Small Size of Certain Retention Cohorts.

As mentioned earlier in this report, during the post-Cold War drawdown of the early

to mid-1990s, the Army, Navy and Air Force reduced their accessions below the level

needed to sustain the force as a way of meeting their endstrength goals. As a result,

the cohorts that entered the services during these years are comparatively small.

These smaller cohorts will create a more challenging retention environment in future

years when the comparatively low number of recruits in these cohorts finish their

enlistments and begin to make retention decisions. In order to meet their needs for

mid-level enlisted personnel, the affected Services will need to achieve a higher than

normal retention rate. This factor is even more of an issue in certain retention critical

specialties. According to Vice Admiral Patricia Tracey, deputy assistant secretary of

defense for military personnel policy, the Services will need “virtually a 100%

continuation rate”66 to sustain normal manning in certain specialized skill areas.

Factor #2: PERSTEMPO Level. Another factor that could negatively

impact retention rates would be a high PERSTEMPO level. Although deployments

can have a positive effect on retention, studies indicate that after a certain threshold

level, high PERSTEMPO levels have a negative effect on retention.67 While it is

(...continued)

Else.

Cited by Jim Garamone,, “DOD Working On Retention Challenges,”American Forces Press

Service, May 9, 2001.

See for example James Hosek and Mark Totten, Does Perstempo Hurt Reenlistment? The

(continued...)

CRS-41

difficult to assess just where this threshold level is, it is possible that future increases

in PERSTEMPO levels could have a negative effect on retention.

Factor #3: Competition With Civilian Employers. The United States is

currently in the midst of an economic slowdown. This benefits military retention, as

it reduces the attractiveness of leaving the military. However, as the economy tends

to follow a cyclical trend, it is likely that the currently sluggish economy will be

replaced in the not too distant future by a more robust one. Such a revival would

create more civilian employment opportunities for military personnel and could create

a more challenging retention environment. On the other hand, the vicissitudes of the

economy may lead some military members to view the security of a military career

with greater appreciation.

Options for Congress. There are a number of options that Congress could

consider to address retention shortfalls. Below is a list of policies that could be used

to respond to one or more of the factors mentioned above, grouped under four broad

headings.

More Competitive Pay and Benefits. This response could be effective if

it appeared that serious retention shortfalls were being caused primarily by increased

competition with civilian employers. As mentioned previously, aggregate retention

rates in the military are the product of thousands of individual decisions on whether

or not to stay in the military. These individual decisions, it is believed, are based on

the individual’s answer to one basic question: “Would I be better off if I stayed in

or left the military?” A major factor in this calculation is military compensation – pay

and benefits – or, more specifically, the perceived value of military compensation

relative to civilian compensation.

Pay. Across-the-board pay raises would be an option to improve the perceived

competitiveness of military compensation. However, they are expensive and some

argue that they are inefficient because they give raises to people in pay grades or

occupational specialties that do not have retention shortfalls. Another option would

be to target pay raises towards retention critical pay grades. This can also be

problematic, however, as it can distort the relationship between pay grades and

minimize the incentive to get promoted. For example, targeted pay raises might

enable lower ranking members to make nearly as much higher ranking members, a

phenomenon known as “pay compression,” or more than higher ranking members, a

phenomenon known as “pay inversion.” Another option, should Congress view this

as a problem, would be to increase total pay in a targeted manner by increasing reenlistment or retention bonuses for those in retention critical occupational skills, pay

grades, or retention cohorts. It might be considered if the projected shortfalls occur

due to the comparatively small size of certain retention cohorts mentioned above.

(...continued)

Effect of Long or Hostile Perstempo on Reenlistment, RAND, 1998; Paul Sticha, Paul Hogan

and Maris Diane, Personnel Tempo: Definition, Measurement, and Effects on Retention,

Readiness and Quality of Life, Army Research Institute, 1999; and Peter Francis, OPTEMPO

and Readiness, Center for Naval Analysis, 1999.

CRS-42

Benefits. With respect to benefits, the military currently offers a number of

valuable benefits to servicemembers, including health care, a generous noncontributory retirement plan, educational benefits, subsidized grocery stores, and free

or inexpensive access to various recreational facilities. Congress might consider

enhancing these benefits or expanding certain benefits to family members.

Retention officers and career counselors will often repeat the adage that

“individuals enlist, but families reenlist.” This summarizes the belief that

servicemembers’ decisions are profoundly affected by the attitudes of their spouses

and children. In light of this, an option to encourage retention would be to provide

more benefits to family members, particularly spouses. For example, Congress

recently gave the Services the authority to allow certain military personnel to transfer

their GI Bill benefits to their spouse or children as a reenlistment incentive. While this

will likely increase the cost of the GI Bill program – as the benefit likely will be

utilized more often – it arguably provides family members with a significant incentive

to endure the hardships of military family life. If this program is successful, it may be

worth further consideration. The Department of Defense has opposed efforts to

transfer GI Bill benefits to family members in the past on the grounds that it is an

untested concept, could be very expensive, and could hurt recruiting efforts in the

future because children of servicemembers, who are an excellent source of recruits,

would not need to join the service to acquire GI Bill benefits.68 However, Deputy

Secretary of Defense Paul Wolfowitz indicated at his Senate confirmation hearing in

2001 that he favored expanded family educational benefits.69

Increased Funding For Operations And Maintenance. One of the

issues commonly cited as a cause of retention shortfalls is decreased job satisfaction.

There are several components to this sense of dissatisfaction, not all of which are easy

to resolve through congressional action. Dissatisfaction over the level of resources

provided could be addressed by Congress if it were deemed a major problem.

Increasing the amount equipment, spare parts, ammunition, fuel, and related supplies

might mitigate a significant source of job dissatisfaction among some military

personnel. However, increasing funding of operations and maintenance accounts

might have a negative impact on other budgetary priorities.

More Flexible Career Paths. Another strategy for improving job

satisfaction, some analysts suggest, would be to make military career paths more

flexible, thereby giving military personnel more control over their professional

development.

At present, the military personnel system usually requires

servicemembers to serve in a fairly rigid progression of assignments, involving

frequent moves and constant rotation into new jobs. Some have argued that this

system should be modified to allow individual’s greater involvement in their duty

assignments; for example, by allowing them to stay longer at a given assignment or

in a given pay grade if they so desire. On the other hand, longer tours would mean

that military personnel would receive a narrower array of job experiences during the

Rick Maze, “Pentagon Opposes GI Bill Transfer To Family Members,” Army Times,

September 11, 2001, 10.

Vince Crawley, “Expanding GI Bill Gets DOD Support,” Marine Corps Times, March 12,

2001, 20.

CRS-43

course of their careers, and staying longer in a given pay grade could reduce

promotion rates for more junior personnel.

Another option might be to expand current programs that allow military

personnel, usually officers, to earn an advanced degree at a civilian university or to

learn the best business practices of a given industry by working for a corporation

while remaining on active duty. In exchange for this opportunity, the servicemember

must agree to serve a specified number of years in the military at the completion of

the program (generally the service obligation is three years for every year in the

program). This type of program might be extended to more officers and enlisted

personnel as well. The military could benefit from this both by obtaining substantial

service obligations from participating servicemembers and by obtaining better

educated or more highly trained employees. The downside, of course, is that

servicemembers are unavailable for military duties while enrolled in these programs.

A less expensive variation of this would be to allow unpaid sabbaticals for a year or

eighteen months to allow military personnel to take a break from military life without

damaging their careers. This option might be an especially useful tool for retaining

those who basically enjoy military life, but who have need a temporary break in

service to attend to family problems or to recover from “burn out.”

Reduced PERSTEMPO Levels. This response would likely be effective if

retention shortfalls were caused primarily by dissatisfaction with high rates of

deployment away from home station. PERSTEMPO management is generally

considered to be an executive branch function, but Congress certainly has the ability

to influence PERSTEMPO levels in a number of ways. Two of the most obvious are

providing funding for fewer military commitments or, alternatively, increasing the

number of military personnel available to handle existing or future commitments.

Other options frequently mentioned include requiring greater use of Reserve

Component forces or civilian contractors. Another option, often mentioned with

respect to the various Services “transformation initiatives,” would be to promote the

procurements of various systems that reduce the demands on military manpower. For

instance, plans for a new Navy destroyer call for a crew of about 95 people, as

compared to a crew of more than 300 for current Navy destroyers.

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